Two securities M and N trading on the same stock exchange are influenced by two macroeconomic factors, namely gross domestic product (GDP) and the investment environment. The following financial...

Two securities M and N trading on the same stock exchange are influenced by two macroeconomic factors, namely gross domestic product (GDP) and the investment environment. The following financial information relates to the two financial assets and their sensitivities to the factors they face on the stock market:

It is also given that the economy of operation’s inflation rate is 7.5% and the investment rate average is 12% while the Treasury bill rate is 10%. Determine the total returns to stocks M and N using the APT model by Stephen Ross.