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

question 7

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. $\begin{array}{llll}&A&B&C\\\text { a. } & 0.082 & 0.091 & 0.033 \\\text { b. } & 0.105 & 0.109 & 0.032 \\\text { c. } & 0.132 & 0.128 & 0.033 \\\text { d. } & 0.165 & 0.121 & 0.032 \\\text { e. } & 0.850 & 0.850 & 0.610\end{array}$

---

Definitions:

Tenth Amendment

An amendment to the U.S. Constitution stating that powers not delegated to the federal government are reserved to the states or the people.

Defense of Marriage Act

A U.S. federal law enacted in 1996, which, prior to being ruled unconstitutional, defined marriage for federal purposes as the union between one man and one woman, and allowed states to refuse to recognize same-sex marriages granted under the laws of other states.

Constitutional Clauses

Specific provisions or sections within a constitution that detail the powers, rights, and duties of the government and its citizens.

Criminal Laws

Regulations enacted by government to prohibit behavior considered to be harmful or dangerous to society.