Question: Please solve A , B Suppose the two most important macroeconomic sources of risk are the state of the business cycle reflected in returns on

Please solve A, B
Suppose the two most important macroeconomic sources of risk are the state of the business cycle reflected in returns on a market index and unanticipated changes in interest rates captured by returns on a Treasury-bond portfolio. Northwest Airlines has a market beta of 1.2 and T-bond beta of 0.7.
A. Write down the mathematical expression of the two-factor security market line for the security of Northwest Airlines.
B. Suppose the risk premium of the market index is 6%, while that of the T-bond portfolio is 3% and the risk-free rate is 4%. What is the total risk premium of the Northwest Airlines stock? What is the total expected return of the Northwest Airlines stock?
 Please solve A, B Suppose the two most important macroeconomic sources

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