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Suppose two asset returns are described by a one factor model, 11 = 0.2% +0.58+ e1 2 -1.8% +0.91 + 2 Under arbitrage pricing theory,

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Suppose two asset returns are described by a one factor model, 11 = 0.2% +0.58+ e1 2 -1.8% +0.91 + 2 Under arbitrage pricing theory, what is the risk free rate of return? (Nearest 0.01 in percentage terms, e.g. write 4.25 for 4.25%)

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