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Calculate the required return for freedom corporation

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The estimated factor sensitivities of Freedom Corporation to Fama-French factors and the risk premia associated with those factors are given in the following table:

                                 Factor Sensitivity                 Risk Premium (%)
Market factor                1.8                                   2.8%
Size factor                    0.4                                  1.7%
Value factor                 -0.5                                  3.4%

Problem i. Based on the Fama-French model, calculate the required return for Freedom Corporation using these estimates. Assume that the Treasury bill rate is 3 percent.

Problem ii. What do you know about Freedom Corporation based on its factor sensitivities?

Reference no: EM132887295

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