Problem

Suppose a three-factor model is appropriate to describe the returns of
a stock.  Information about those three factors is presented in the
following chart.  Suppose this is the only information you have
concerning the factors.

Factor		Beta of Factor			Expected Value		Actual Value

GNP		0.0042				$4,416				$4,480
Inflation	 	- 1.40				3.1%				4.3%
Interest rate	-0.67				9.5%				11.8%

a.  What is the systematic risk of the stock return?
b.  Suppose the expected return of the stock is 9.5 percent.  What is
the total return on this stock?

Question

What financial concept or principle is the problem asking you to solve?

What are some business decisions that a manager would be able to make
after solving the problem?

Is there any additional information missing from the problem that
would enhance the decision-making process?

Without showing mathematical calculations, explain in writing how you
would solve the problem?