Question: 15. (3 points) Consider the multifactor APT model with two factors. Portfolio A has a beta of.5 on factor one and a beta of 1.25

15. (3 points) Consider the multifactor APT model with two factors. Portfolio A has a beta of.5 on factor one and a beta of 1.25 on factor two. The risk premiums on the factor one and two portfolios are 1% and 7%, respectively. The risk-free rate of return is 7%. The expected return on portfolio A is if no arbitrage opportunities exist. a. 13.5% b. 15% c. 16.25% d. 23%

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