Question: A different analyst uses a twofactor APT model to evaluate expected returns and risk. The risk premiums on the factor 1 and factor 2 portfolios

A different analyst uses a twofactor APT model to evaluate expected returns and risk. The risk premiums on the factor 1 and factor 2 portfolios are 4.25% and 2.95%, respectively, while the riskfree rate of return remains at 0.75%. According to this APT analyst, your portfolio has a beta on factor 1 of 3.70 and a beta on factor 2 of 2.60. According to APT, what is the expected return on your portfolio if no arbitrage opportunities exist?

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