There is a new portfolio just formed (portfolio 3). It has loadings of 3 and 1.5 on factor 1 and 2, respectively. The expected return on this portfolio is 10%. Construct an arbitrage strategy that generates $100 today for sure and costs nothing in the future.

Assume that you are in the two-factor exact APT world. There are two portfolios (portfolio 1 and portfolio 2) which have loadings on the two factors as follows: oadings factor 1 factor2 portfolio 1 .680.55 portfolio 2 1.27 1.06 The expected return on portfolio 1 is 8.18% and the expected return on portfolio 2 is 12.91%. The risk-free rate is 2.37%