-Given the Factors Pricing Assets Above and a Risk-Free Rate

question 10

Multiple Choice

$\begin{array}{|l|l|l|l|l|}\hline & \text { Factor 1 } & \text { Factor 2 } & \text { Factor 3 } & \text { Factor 4 } \\\hline \text { Risk premium } & 3.8 \% & 4.4 \% & 5.7 \% & 5.9 \% \\\hline \text { Asset sensitivity } & -1.2 & -1.6 & 1.9 & 0.6 \\\hline\end{array}$
-Given the factors pricing assets above and a risk-free rate of return of 6%,what is the expected return of the asset using the APT?

• A) \( 2.49 \% \)
• B) \( 2.76 \% \)
• C) \( 3.13 \% \)
• D) \( 8.77 \% \)

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Definitions:

Inventory On Hand

The total quantity of goods available and stored by a business at any given time.

Planning Bills Of Material

A documented list of all the components, materials, and assemblies needed to create a product, used for planning and forecasting purposes.

Kits

Assembled sets of components or materials prepared for immediate use or further assembly.

Dependent Demand

A demand for items that occurs as a direct result of demand for other items. It is typically calculated rather than forecasted, such as components or raw materials required for producing a final product.