Please show step-by-step solution with formulas/calculations

Suppose that three stocks (A, B, and C) and two common risk factors (1 and 2) have the following relationship: E(RA) = (1.1) 11 + (0.8)/2 E(RB) = (0.6) 1 + (0.5) 12 E(RC) = (1.6) 1 + (1.1)Az a. If A1 = 3% and 12 = 4%, what are the prices expected next year for each of the stocks? Assume that all three stocks currently sell for $40 and will not pay dividend in the next year. Do not round intermediate calculations. Round your answers to the nearest cent. Expected price for Stock A: $ Expected price for Stock B: $ Expected price for Stock C: $ b. Suppose that you know that next year the prices for Stocks A, B, and C will actually be $47.27, $41.37, and $42.00. Assume that you can use the proceeds from any necessary short sale. Determine the riskless, arbitrage investment to take advantage of these mispriced securities. In order to create a riskless arbitrage investment, an investor would -Select- va riskless arbitrage investment. What is the profit from your investment? Round your answer to the nearest cent. $ -Select- -Select- short 1 share of B and 1 share of C, and buy 2 shares of A. short 1 share of B and 1 share of A, and buy 2 shares of C. short 1 share of C and 1 share of A, and buy 2 shares of B. short 2 shares of B and buy 1 share of A and 1 share of C. short 2 shares of A and buy 1 share of B and 1 share of C