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What is the factor price 1 in this market

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There is a 2-factor market with two widely diversified portfolios L and M. Factor loadings are b L1 = 2, b L2 = 0.6, b M1 = 0.2, b M2 = 1.5. The riskfree rate is 2%. The mean rates of return of L and M are 8% for L and 15% for M. What is the factor price λ 1 in this market?

Reference no: EM132752684

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