A Two Factor Model for the Return for Security X

question 21

Multiple Choice

A two factor model for the return for Security X is 2% - 3(CPI) + 2(GDP) . If you forecast CPI to be 2% and GDP to be 6%, the expected return for Security X is

• A) 20%.
• B) 12%.
• C) 2%.
• D) 8%.

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