An analyst has modeled the stock of a company using a FamaFrench three-factor model and has estimated that ai 5 0, bi 5 0.7,ci 5 1.2, and di 5 0.7. Suppose that the daily risk-free rate isapproximately equal to zero, the market return is 11%, the returnon the SMB portfolio is 3.2%, and the return on the HML portfoliois 4.8% on a particular day. The stock had an actual return of 16.9%on that day. What is the stock’s predicted return for that day?(14.9%) What is the stock’s unexplained return for the day? (2%)

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