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= Under a two factor model with APT, suppose that expected returns are described by E{r} = 3% + b11 + b2x5% Given two asset

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= Under a two factor model with APT, suppose that expected returns are described by E{r} = 3% + b1\1 + b2x5% Given two asset returns are described by r1 = 0% + 1f1 +372 + e1 12 = 1% + 1f1 + 262 + e2 what is the expected return of f2? (Nearest 0.01 in percentage terms, e.g. write 4.25 for 4.25%)

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