5. Based on historical analysis, the risk premium for exposure to market ambiguity is 7.5% and the risk premium for exposure to the investor sentiment is -3.5%. An analyst uses the multi- factor APT with two factors to estimate the expected return on a firm's stock. A firm has a beta relative to market ambiguity of 0.7, and a beta relative to investor sentiment of 0.25. If the risk-free rate is 1.25%, what is the expected return on the firm's stock? (2 points) 6. You are given the following information on two stocks: R = 8.5% b1 = 0.6 R = 14.5% B2 = 1.4 If the stocks are correctly priced on the security market line. Derive and draw the security market line. Clearly label the axes, the y-intercept and the market portfolio. (7 Points) 6