Short-Answer Question 4 (6 points) You have the following information on two stocks, ABC, and GBW, regarding their beta coefficients on 2 factors - SP500 and FRGN (a foreign equity market where these stocks trade). Stock ABC GBW SP500 1.4 0.9 FRGN 0.75 0.45 The rate on the Tbill is 2.0%, and you also have the relevant expected excess returns for each of these factors: SP500 7.60% FRGN 2.50% Your firm uses the CAPM for all their expectations modelling. However, unknown to either you or your firm, the true return generation function is the 3 factor model: Rp = R + BSP500+B_FRGN For a portfolio of 50% in each security: What is the expected return according to CAPM? What is the expected return according to the 2-factor model? Will your boss think you have out-performed, under-performed, or just met expectation? If over or under, by how much (in basis points)