Suppose that a two-factor model, where the factors are the market return and the growth rate of industrial production, correctly describes the risk-return characteristics of all assets. Consider two well-diversified portfolios A, B, and C with the following characteristics. The risk-free rate is 5%.

Portfolio	Expected Return	Sensitivity to Factor 1	Sensitivity to Factor 2
A	10%	1	-1
B	15%	0.5	1
C	?	0	0.5

What is the APT-consistent expected rate of return on C?

12.5%

2.5%

7.5%

17.5%