Question: correct answer Suppose you are working with two factor portfolios, portfolio 1 and portfolio 2. The portfolios have risk premiums of 12% and 3%, respectively.

correct answer

Suppose you are working with two factor portfolios, portfolio 1 and portfolio 2. The portfolios have risk premiums of 12% and 3%, respectively. Based on this information, what would be the expected return on well- diversified portfolio A, if A has a beta of 0.80 on the first factor and 0.50 on the second factor? The risk-free rate is 3%. Select one: O A 14.1% O B. 15.2% O C. 8.4% O D. 13.3% O E. 10.7%

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