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Suppose two asset returns are described by a one factor model, r1 = 0.2% + 0.5f + ei 12 = -1.8% + 0.9f + 2
Suppose two asset returns are described by a one factor model, r1 = 0.2% + 0.5f + ei 12 = -1.8% + 0.9f + 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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