In accordance with the Arbitrage Pricing Theory. assume that stock returns can be explained by the following four factor model: ElR] = RF+ ElFl + ['2ze + 3.st + 34H Below please nd betas for each of four stocks as follows: assume there is no rm specic risk. Stock El 32 Ba Eel A 1.25 .Ir' .03 .55 El .65 1.4!] .45 .35 C .?5 .2D 1.34:]I .15 D .35 .SD 1.2!) 1.45 The rislc premiums for the factors are 5.2%. 5.?%. 3.9% and 11.3% respectively. If you create a portfolio comprised of 25% of Stock A. 15% ofStock B. and 30% each of Stocks C and D. what is the equation for your model? Assuming a riskfree rate of 5%. what is the expected return on your portfolio? Assume that the factors in this model include the following: Heal growth in GDP lF1l. unexpected inflation leil'. change in interest rates {F3}. and change in expected inflation (Fol. What do the signs and magnitude of the corresponding betas tell you about the stocks in this portfolio? Factor models are one method of assessing risk and return. the Capital Asset Pricing Model lCAPMl is another. How does this method that you have used above differ from the CAPM? Under what conditions would you obtain the same expected return using either method