6.S Suppose that Two


10.00 points

Suppose that two factors have been identified for the U.S. economy: the growth rate of industrial production, IP, and the inflation rate, IR. IP is expected to be 5%, and IR 3.0%. A stock with a beta of 2.6 on IP and 1.9 on IR currently is expected to provide a rate of return of 13%. If industrial production actually grows by 7%, while the inflation rate turns out to be 6.0%, what is your revised estimate of the expected rate of return on the stock? (Do not round intermediate calculations. Round your answer to 1 decimal place. Omit the “%” sign in your response.)

  Revised expected rate of return [removed] %  

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