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Consider the two-factor APT model. Portfolio A has a beta of 0.5 on factor 1 and a beta of 1.25 on factor 2. The risk

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Consider the two-factor APT model. Portfolio A has a beta of 0.5 on factor 1 and a beta of 1.25 on factor 2. The risk premiums on the factors 1 and 2 portfolios are 1percent and 7percent respectively. The risk-free rate of return is 7percent. What is the expected return on portfolio if no arbitrage opportunities exist? (0.1625)

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