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Amy wants to invest in a portolio and has collected the following information about sensitivity of two stocks. As you are financial management consultant, she

image text in transcribed Amy wants to invest in a portolio and has collected the following information about sensitivity of two stocks. As you are financial management consultant, she approached you and presented this information below. Required: a) Assuming the expected risk premium is \7 on factor 1 and \8 on factor 2 . Using APT calculate risk premium of each of the stock for Amy. (10 marks) b) Suppose she buys \\( 1000 \\) of stock A and sell \\( 400 \\) of stock B. Calculate the sensitivity of her portfolio to each of the factors and calculate expected risk premium of the portfolio

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