Consider the following multifactor (APT) model of security returns for a particular stock.
Factor Factor Beta Factor Risk Premium
Inflation 1.6 6%
Industrial production 1.1 7
Oil prices 0.7 2
a.
If T-bills currently offer a 5% yield, find the expected rate of return on this stock if the market views the stock as fairly priced. (Do not round intermediate calculations. Round your answer to 1 decimal place. Omit the "%" sign in your response.)
Expected rate of return %
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