Warren, an analyst at Lumia Electric $($LE$),$ models the company$$s stock assuming that all stocks$$ returns depend on only three risk factors: inflation, industrial production, and the aggregate degree of risk aversion. The risk$-$free rate is rRF

$=8\%,$ the return on the market is rM

$=10\%,$ and the rest of the available data is given in the following table:

Variable

Value

The required rate of return on an inflation portfolio, r$1$

$8\%$

The required return on an industrial production portfolio, r$2$

$12\%$

The required return on a risk$-$bearing portfolio, r$3$

$5\%$

Factor sensitivity to the inflation portfolio, b$1$

$0\mathrm{.}5$

Factor sensitivity to the industrial production portfolio, b$2$

$0\mathrm{.}4$

Factor sensitivity to the risk$-$bearing portfolio, b$3$

$1\mathrm{.}1$

Lumia Electric$$s beta, bL

E

$2\mathrm{.}0$

Using the APT model, Warren calculates that LE$$s required rate of return is $.$

If Warren used the Capital Asset Pricing Model, he would have calculated that LE$$s required rate of return is $.$