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Question 3 Unanswered 5 attempts left Suppose stock returns are described by the following...

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Question 3 Unanswered 5 attempts left Suppose stock returns are described by the following two factor model: r=a+B, XF1+B2XF,+E; The risk free rate is r=4%. The risk premium on factors one and two are 1,58% and =10%, respectively. According to the APT, what is the expected return E[r] of a stock with betas of B2=1.5 and B2=0.5? Express your answer in percentage terms (e.g., if you obtain E[r]=0.1 or 10%, write 10 in the answer box.) (Hint: apply the APT pricing equation.] Type your response Submit

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