1. Required Rate of Return
AA Corporation’s stock has a beta of 1.0. The risk-free rate is 3% and the expected return on the market is 13%. What is the required rate of return on AA's stock? Round your answer to two decimal places
2. Fama-French Three-Factor Model
An analyst has modeled the stock of a company using the Fama-French three-factor model. The market return is 8%, the return on the SMB portfolio (rSMB) is 2.9%, and the return on the HML portfolio (rHML) is 5.6%. If ai = 0, bi = 1.2, ci = -0.4, and di = 1.3, what is the stock's predicted return? Round your answer to two decimal places. %