You have a proprietary multifactor linear asset pricing model which you use to estimate your stock returns.

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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 0 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?

Related Book For answer-question

Applied Corporate Finance

ISBN: 978-1118808931

4th edition

Authors: Aswath Damodaran

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Posted Date: Mar 16, 2023 03:24 AM

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You have a proprietary multifactor linear asset pricing model which you use to estimate your stock returns.

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Using the multifactor linear asset pricing model the expec... View the full answer

Applied Corporate Finance

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