Problem:
An analyst has modeled the stock of Crisp Trucking using a two-factor APT model. The risk-free rate is 6% the expected return on the first factor (r1) is 12% and the expected return on the second factor (r2) is 8%. If bi1 = 0.7 and bi2 = 0.9
Required:
Question: What is Crisp's required return?
Note: Show all workings.