Suppose you are working with two factor portfolios


Suppose you are working with two factor portfolios, portfolio 1 and portfolio2. The portfolios hace expected returns of 12% and 9%, respectively. Based on this information, what would be the expected return on well-diversified portfolio A, if A has a beta of 1.10 on the first factor and .75 on the second factor? The risk-free rate is 2%.

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Financial Management: Suppose you are working with two factor portfolios
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