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All parts please Question 3 Consider a 3 factor APT world F1 F2 F3 Factor risk premium 4% 5% 6% Rx = 6% i. Write

All parts please

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Question 3 Consider a 3 factor APT world F1 F2 F3 Factor risk premium 4% 5% 6% Rx = 6% i. Write down the equation of APT? ii. Now consider the following 2 stocks in this APT world - Stock Sensitivities/ F1 F2 F3 RIL 0.6 1.3 1.8 Infy. 1.4 2 1.9 a. Calculate the expected return from each stock. b. Construct a portfolio combining these two stocks such that the portfolio has the unit sensitivity w.r.t. factor 1. c. Find out the factor sensitivities of the portfolio constructed by you in (ii) (b) d. Find out the expected return by above portfolio? e. An investor has own funds of 6000. He leverage 4000 at Rf. He invest the entire fund in RIL & Infoy.in the ratio of 4 : 1. Calculate factor sensitivities of his portfolio

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