answer parts b and c, please.

a. Suppose that two factors have been identified for the U.S. economy: the growth rate of industrial production, IP, and the inflation rate, IR. IP is expected to be 2%, and IR 6%. A stock with a beta of 1 on IP and .5 on IR currently is expected to provide a rate of return of 12%. If industrial production actually grows by 5%, while the inflation rate turns out to be 8%, what is your revised estimate of the expected rate of return on the stock? b. Consider the following data for a one-factor economy. Both portfolios are well diversified. Portfolio A F 60 14% 6% Beta 1.4 0.0 Suppose that another portfolio, portfolio E, is well diversified with a beta of .6 and expected return of 8%. Would an arbitrage opportunity exist? If so, what would be the arbitrage strategy? C. Assume that both portfolios A and B are well diversified, that Era) = 12%, and Erb) = 6%. If the economy has only one factor, and BA= 1.2, whereas BB= .8, what must be the risk-free rate? =