Find the expected rate of return on stock

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Consider the following multifactor (APT) model of security returns for a particular stock.

Factor Factor Beta Factor Risk Premium

Inflation 1.08 0.07

Industrial production 0.44 0.08

Oil prices 0.14 0.02

If T-bills currently offer a 0.04 yield, find the expected rate of return on this stock if the market views the stock as fairly priced.

Round your answer to 4 decimal places. For example if your answer is 3.205%, then please write down 0.0321.

Reference no: EM132711653

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