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A well-balanced portfolio is sensitive two 2 factors, GDP and Unemployment. Its GDP beta has a value of 0.9, while its unemployment beta has a

A well-balanced portfolio is sensitive two 2 factors, GDP and Unemployment. Its GDP beta has a value of 0.9, while its unemployment beta has a value of 1.5.

GDP has a long-run expected growth of 5.20% and the long-run unemployment rate is expected to be 11.70%.

The risk-free rate is 2.00%.

Calculate the portfolio's long-run expected return.

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