Question: You have a proprietary multifactor linear asset pricing model which you use to estimate your stock returns. The stock you are currently attempting to forecast

You have a proprietary multifactor linear asset pricing model which you use to estimate your stock returns. The stock you are currently attempting to forecast has factor loadings of -0.2, 0.9, and O respectively. At the same time, these factors have estimated risk premia (annual) of 2.7%, 2.8%, and 0.1%. Given you believe the risk-free rate to be 2% this year, what is your forecasted return for the stock you are currently evaluating? Please give your return in whole numbers, if you compute an answer of 10.2% enter the value 10.2
Step by Step Solution
There are 3 Steps involved in it
Get step-by-step solutions from verified subject matter experts
