Find the equilibrium rate of return on this stock

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Reference no: EM132012870

Suppose that the market can be described by the following three sources of systematic risk with associated risk premiums.

  Factor Risk Premium
  Industrial production (I) 7%           
  Interest rates (R) 4              
  Consumer confidence (C) 6              

The return on a particular stock is generated according to the following equation:
r = 15% + 1.1I + 0.6R + 0.90C + e

Find the equilibrium rate of return on this stock using the APT. The T-bill rate is 7%. (Do not round intermediate calculations. Omit the "%" sign in your response.)

Equilibrium rate of return %

Reference no: EM132012870

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