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Question 3 (25 points): You have the following assets available to you: Asset Expected Return Riskless Debt 3.5% Market portfolio 10% Well-diversified portfolio of firms exposed to oil 11% prices Well-diversified portfolio of firms with no 9% exposure to oil prices Well-diversified portfolio of firms exposed to 14% gold prices Well-diversified portfolio of firms with no 13.4% exposure to gold prices 8 points: What is the value of the gold factor you can construct with these assets? b. 8 points: What is the value of the value of the oil factor you can construct with these assets? 9 points: You are attempting to find the cost of equity for a firm using a factor model with the following factors and betas: a. C. Factor Beta CAPM market factor 1.1 Gold factor from Part A 1.6 Oil factor from Part B 0.8 What would you estimate this firm's cost of equity to be? Question 3 (25 points): You have the following assets available to you: Asset Expected Return Riskless Debt 3.5% Market portfolio 10% Well-diversified portfolio of firms exposed to oil 11% prices Well-diversified portfolio of firms with no 9% exposure to oil prices Well-diversified portfolio of firms exposed to 14% gold prices Well-diversified portfolio of firms with no 13.4% exposure to gold prices 8 points: What is the value of the gold factor you can construct with these assets? b. 8 points: What is the value of the value of the oil factor you can construct with these assets? 9 points: You are attempting to find the cost of equity for a firm using a factor model with the following factors and betas: a. C. Factor Beta CAPM market factor 1.1 Gold factor from Part A 1.6 Oil factor from Part B 0.8 What would you estimate this firm's cost of equity to be