Below is a three factor model describing the returns of a stock:

Factor             Beta of a 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%
1)What is the systematic risk of the stock return?
2)Assume the returns are dampened by 2.6 percentage points.  What is
the unsystematic risk of the stock return?
3) Suppose the expected return of the stock is 9.5 percent. What is
the total return on this stock?

Hi lola5!!

Let start sorting the info:

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%


1)What is the systematic risk of the stock return?

The systematic risk is related to economy/market-wide events like
interest rates, recessions and wars. These events affect all stock
market and cannot be diversified away. One easy way to identify a
systematic risk factor is looking for those factors that affect a
large number of firms in the market. You must mote that those factors
do not affect equally all the firms.
The systematic factors in the list are GNP, inflation and interest rate.

Syst. Risk = 0.042(4,480? 4,416) ? 1.4(4.3%? 3.1%) ? 0.67(11.8% ?9.5%) =
           = ? 0.53%
 
                     --------------------------
 
2)Assume the returns are dampened by 2.6 percentage points.  What is
the unsystematic risk of the stock return?

The unsystematic risk is related to events that don't affect all
companies, only the analized company is affected, so these factors are
specific to the firm or industry. Unsystematic risk can be diversified
away through portfolio formation. Variation on these factors will
affect the returns of the analized firm, but they will have no effect
on the returns of firms in a different industry and perhaps little
effect on other firms in the same industry. Examples include your
plant burns down, your product flops, or your product is a huge hit.
The unexpected bad news about the firm that dampens the returns by
2.6% is an unsystematic risk, and in this case it is the only one; so:

Unsystematic Risk = ? 2.6%
 
                    ------------------------

3) Suppose the expected return of the stock is 9.5 percent. What is
the total return on this stock?

Total Return = expected return + Syst. Risk + Unsyst. Risk =
             = 9.5% ? 0.53% ? 2.6% = 
             = 6.37%

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I hope that this helps you. Feel free to request for a clarification
if you need it before rate this answer.

Regards.
livioflores-ga