Suppose That We Have Identified Three Important Systematic Risk Factors

question 20

Multiple Choice

Suppose that we have identified three important systematic risk factors given by exports, inflation, and industrial production.In the beginning of the year, growth in these three factors is estimated at
-1%, 2.5%, and 3.5% respectively.However, actual growth in these factors turn out to be 1%, -2%, and
2%) The factor betas are given by bEX = 1.8, bI = 0.7, and bIP = 1.0.The expected return on the equity
Is 6%.What would the equity's total return be if the actual growth in each of the facts was equal to
Growth expected? Assume no unexpected news on the patent.

• A)4%
• B)5%
• C)6%
• D)7%
• E)8%

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Definitions:

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Assets, materials, or other forms of support available to an individual or organization for effective functioning.

Petty Annoyances

Minor irritations or frustrations that though trivial, can disproportionately affect mood and well-being.

Irritations

Mild forms of discomfort or annoyance, often triggered by specific environmental or psychological stimuli.

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are feelings of dissatisfaction and discomfort arising from obstacles that prevent one from achieving goals or satisfying needs.