Consider an economy in which the random return , on each individual asset i is given by r = E(ri) + Bim[FM - E(TM)] + Biv[rv - E(v)] + Ei where, as we discussed in class, E() equals the expected return on asset i, TM is the random return on the market portfolio, ry is the random return on a "value" portfolio that takes a long position in shares of stock issued by smaller, overlooked companies or companies with high book-to-market values and a corresponding short position is shares of stock issued by larger, more popular companies or companies with low book-to-market values, E is an idiosyncratic, firm-specific component, and Bim and Bi, are the "factor loadings" that measure the extent to which the return on asset i is correlated with the return on the market and value portfolios. Assume, as Stephen Ross did when developing the arbitrage pricing theory (APT), that there are enough individual assets for investors to form many well-diversified portfolios and that investors act to eliminate all arbitrage