Consider the following simplified APT model:

Factor	Expected Risk Premium
Market	6.4%
Interest Rate	-0.6%
Yield Spread	5.1%

Factor Risk Exposures
	Market	Interest Rate	Yield Spread
Stock	Stock(b1)	(b2)	(b3)
P	1.0	-2.0	-0.2
P2	1.2	0	0.3
P3	0.3	0.5	1.0

1. Calculate the expected return for the above stocks. Assume risk free rate is 5%. Consider a portfolio with equal investments in stocks P, P2 and P3
2. What are the factor risk exposures for the portfolio?
3. What is the portfolios expected return?