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You have a proprietary multifactor linear asset pricing model which you use to estimate your...

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Accounting

You have a proprietary multifactor linear asset pricing model which you use to estimate your stock returns. The stock you are currently attempting to forecast has factor loadings of -0.2, 0.9, and 0 respectively. At the same time, these factors have estimated risk premia (annual) of 2.7%, 2.8%, and 0.1%. Given you believe the risk-free rate to be 2% this year, what is your forecasted return for the stock you are currently evaluating?

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