Suppose that the market can be described by the following three sources of systematic risk with associated risk premiums. Factor Risk PremiumIndustrial Production (l) 8%Interest Rates (R) 5Consumer Confidence (C) 7The return on a particular stock is generated according to the following equation:r = 19% + 0.7I + 0.4R + 0.60C + eFind the equilibrium rate of return on this stock using the APT. The T-bill rate is 8%. (Do not round intermediate calculations. Omit the "%" sign in your response.)Equilibrium rate of return %

The equilibrium rate of return on this stock using the APT is 19.80%.

Explanation:

According to given data described in the question, In order to calculate the the equilibrium rate of return using the APT, we would have to use the following formula:

E(rj) = rf + bj1RP1 + bj2RP2 + bj3RP3 + bj4RP4 + ... + bjnRPn

Therefore, Equilibrium rate of return = 8% + 0.7*8%+0.4*5%+0.6*7%

                                                            = 19.80%

The equilibrium rate of return on this stock using the APT is 19.80%.

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whole quiz

1. the sum of all activities involved in getting high-quality products into the marketplace

2.operations

3. the principle of looking at the supply chain as a whole in order to improve the overall flow through the system.

4. produced; performed

5. activities producing tangible products, such as radios, newspapers, buses, and textbooks.

6. activities producing intangible and tangible products, such as entertainment, transportation, and education.

7.   customer focus

8. analyzing a competitor's products to identify desirable improvements

9. the systematic direction and control of the processes that transform resources into finished projects that create value for and provide benefits to consumers.

10. operation management.

your welcome leave a rate and a < 3