A well-balanced portfolio is sensitive two 2 factors, GDP and Unemployment. Its GDP beta has a value of 0.3, while its unemployment beta has a value of -1.6.

GDP has a long-run expected growth of 1.90% and the long-run unemployment rate is expected to be 11.20%.

Next year, the actual value that GDP will grow at is 6.70%, and unemployment's actual value will be 1.80%.

The risk-free rate is 4.70%.

Assuming the error term on the factor model is equal to 0, use a factor model to calculate the portfolio'sactual return next year.

(HINT: You will also need to use the APT)

You answer should be in percentage points to 2 decimal places (ex: 2.50).