3. You are given the following information regarding two securities. Security Proportion Factor sensitivity 3.0 2.4 A B 0.45 0.65 Suppose based on the one-factor model, the risk-free rate is given as 5% and the expected return on a portfolio with unit sensitivity to the factor is 9%. a. According to the Arbitrage Pricing Theory (APT), what is the portfolio's equilibrium expected return? (10 marks] b. If a portfolio is not on the equilibrium plane, explain how investors can take advantage of an arbitrage opportunity. [Word Limit: 200 words] [20 marks] C. Compare and contrast between CAPM and APT. Discuss the differences in application of CAPM and APT in real world. [Word Limit: 200 words] [20 marks]