Question: 8. (10 POINTS) Consider a 2 factor model. The following table contains the expected rate of return of each asset (ErA = 0.40 and

8. (10 POINTS) Consider a 2 factor model. The following table contains the expected rate of return of each asset (ErA = 0.40 and ErB = 0.26) as well as the sensitivity for each asset with respect to each factor, that is 1A = 1.5,81B = 2.2, 3A = 2 and BB. = -0.2. The risk-free rate, rf, is rf = 0.06 Portfolio Bi Bi Eri A 1.2 2 0.4 B 3.2 -0.8 0.26 Find the risk premium for each of the 2 factors, F and F

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