1. Assume that there are two factors that price assets. Risk free rate is 3%. Factor 1 has an expected return of 6% and factor 2 has an expected return of 7%. Calculate the expected return for each asset with the following sensitivities using the Arbitrage Pricing Theory (APT): (a) B1 = 1, B2 = 2; (5 marks) (b) B1 = 1.5, B2 = -0.50; (5 marks) (c) B1 = 0.5, B2 = 1.5