Question: Using a two-factor Model Zapata now estimates the three funds' sensitivity to inflation and GDP growth. The information is presented in Exhibit 1. Zapata assumes

Using a two-factor Model Zapata now estimates the three funds' sensitivity to inflation and GDP growth. The information is presented in Exhibit 1. Zapata assumes a zero value for the error terms when working with the selected two-factor model Altuve Asks Zapata to calculate the return for Portfolio AC, composed of a 60 percent allocation to Fund A and 40 percent allocation to Fund C, using the surprises in in inflation and GDP growth in Exhibit 2. - ANS: 2.02%

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