Question: This is the full and complete question with missing links or information Consider a two-factor economy. Assets A and B are well-diversified portfolios. The risk-free

This is the full and complete question with missing links or information

Consider a two-factor economy. Assets A and B are well-diversified portfolios. The risk-free rate is 1%. The standard deviations of the excess return of factor portfolios 1 and 2 are 18% and 15% respectively. The two factor portfolios are uncorrelated. Asset Beta 1 Beta 2 Forecasted Return A 0.5 1.0 7.00% B 1.0 -0.5 8.00% 1) Assume the market is arbitrage free. What are the risk premiums of factor portfolios 1 and 2

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