Question: The two-factor model on a stock provides a risk premium for market risk exposure of 9%, a risk premium for interest rate risk exposure of

The two-factor model on a stock provides a risk premium for market risk exposure of 9%, a risk premium for interest rate risk exposure of (-1.3%), and a risk-free rate of 3.5% The beta for the market risk exposure is 1, and the beta for the interest rate risk exposure is also 1. What is the expected return on the stock?

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