Multiple Choice
Assume the following data for a stock: Risk-free rate = 4 percent; factor-1 beta = 1.5; factor-2 beta = 0.5; factor-1 risk premium = 8 percent; factor-2 risk premium = 2 percent. Calculate the expected rate of return on the stock using a two-factor APT model.
A) 14 percent
B) 17 percent
C) 10 percent
D) 13 percent
Correct Answer:
Verified
Correct Answer:
Verified
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