Exhibit 93
USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)
Stocks

Short Answer

Exhibit 9.3
USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)
Stocks A, B, and C have two risk factors with the following beta coefficients. The zero-beta return ( $\lambda$ ₀) = .025 and the risk premiums for the two factors are ( $\lambda$ ₁) = .12 and ( $\lambda$ ₀) = .10. $$\begin{array} { c c c } \text { Stock } & \text { Factor } 1 b _ { i 1 } & \text { Factor } 2 b _ { i 2 } \\\hline \text { A } & - 0.25 & 1.1 \\\text { B } & - 0.05 & 0.9 \\\text { C } & 0.01 & 0.6\end{array}$$
-Refer to Exhibit 9.3. Calculate the expected returns for stocks A, B, C. $\begin{array}{llll}&A&B&C\\\text { a. } & 0.082 & 0.091 & 0.033 \\\text { b. } & 0.105 & 0.109 & 0.032 \\\text { c. } & 0.132 & 0.128 & 0.033 \\\text { d. } & 0.165 & 0.121 & 0.032 \\\text { e. } & 0.850 & 0.850 & 0.610\end{array}$