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Problem:

An analyst has modeled the stock of a company using a Fama-French three-factor model. The risk-free rate is 6%, the market return is 9%, the return on the SMB portfolio (rSMB) is 2.0%, and the return on the HML portfolio (rHML) is 5.5%. If ai = 0, bi = 1.2, ci = - 0.4, and di = 1.3,

Required:

Question 1: What is the stock's predicted return?

Note: Provide specific examples to support your answers.

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M91172794

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