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# Security A is estimated to be linearly related to four risk factors: F1, F2, F3, and F4 such that ...

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Security A is estimated to be linearly related to four risk factors: F1, F2, F3, and F4 such that its required rate of return can be expressed as ER(A) = mo + n1F1 + n2F2 + n3F3 + n4F4, where mo is the risk-free rate. If the risk-free rate is 5.5 %, what is the required rate of return of Security A, where n1, n2, n3, and n4 are 0.3, 0.6, 0.9, and 0.12, respectively, and F1, F2, F3, and F4 are 6 %, 7 %, 10 %, and 8 %, respectively?

▸ 22.90%

▸ 19.22%

▸ 27.11%

▸ 21.46%
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## Corporate Finance

Edition: 5th
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