Consider a two factor APT. two assets are in equilibrium and they have the following characteristics:

b1 b2 E[r]

Asset 1. 1.50. 1.75. 7%

Asset 2 3.50. 1.25 7.5%

What are the risks premiums (lambda 1 and 2) of the two risk factors (b1 and b2) that are consistent with equilibrium? in this market, assets with no risk yield a return of 0%. To answer this question report only the risk premium of factor 2 (i.e. lambda 2). Answer in percentage without the symbol.

Hint : you will need to use simultaneous equations (system of equations)