I am not able to do Q11. It is a very simple question but I am not able to solve it
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It’s simple.
Return according to the Macroeconomic Factor Model factors are the Shocks ( Difference between actual and consensus forecast).
You need to calculate return for both Stock A and C separately.
For both A and C, E(R) is given, consensus and actual inflation and gdp are given, and then again, betas are given.
Simply calculate returns for both, and then calculate the E(R) of the entire portfolio, containing 60% of A and 40% of B