1. What are Factor 1 and Factor 2 risk premiums?

Suppose that asset returns are generated by a 2 -factor risk model. As a fund manager, you are offering two funds, A and B, with the following returns: rA=rA+bA1f1+bA2f2rB=rB+bB1f1+bB2f2 where f1 and f2 are the two independent risk factors with zero mean. Fund characteristics are given by the following: Factor f1 is the abnormal return on the market portfolio (market return minus its mean). The risk-free rate is 2.75%. Use the above information to find the factor premia for the two factors