The risk premium for exposure to exchange rates is 5% and the firm has a beta relative to exchanges rates of 0.4. The risk premium for exposure to the consumer price index is -6% and the firm has a beta relative to the CPI of 0.8. If the risk free rate is 3.0%, what is the expected return on this stock?
A. 0.2%
b. 1.5%
c. 3.6%
d. 4.0%
Answer: A. 0.2%