What does 'realized factor returns' mean?
Why are they treated the same as the risk premium (i.e. why don't we have
to subtract out the risk-free rate on interest)?
Why do we add this to the expected rate of return to get the probable
one-year realized return?
While I'm at it, I have another question. Why in this same exmple (Study
Guide #11) which is the same as Book Quiz # 10, is there no unique risk
involved, i.e. no 'noise'. I would think the solution to each part of #10
in the Book Quiz should be some number a + the result given by the book
answer, where a is the 'noise' that Chapter 8 explains each stock as
containing when describing the Arbritage Pricing Theory.
Once again, I plead for HELP!!!!