Determine the systematic risk of stock return

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Reference no: EM1361354

Suppose a factor model is appropriate to describe the returns of a stock. Information about those three factors is presented in the following chart.

Factor Beta Factor Expected Value Actual Value

Growth in GNP 2.04 3.5% 4.8%
Inflation Rates -1.90 14.0 15.2
Interest Rate 10

a. What is the systematic risk of the stock return?

b. The firm announced that its market share had unexpectedly increased from 23 percent to 27 percent. Investors know from their past experience that the stock return will increase by 0.36 percent per an increase of 1 percent in market share. What is the unsystematic risk of the stock?

c. What is the total return on this stock?

Reference no: EM1361354

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