question A portfolio manager wants to create a simple portfolio from only two stocks, A and B. The returns for stocks A

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question A portfolio manager wants to create a simple portfolio from only two stocks, A and B. The returns for stocks A

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question
A portfolio manager wants to create a simple portfolio from only
two stocks, A and B. The returns for stocks A and B are given by
the following equations:
RA = 0.09 –
1FINF + 1FGDP + εA
and
RB = 0.12 +
2FINF + 4FGDP + εB
The manager forms a
portfolio with market value weights of 40% in Stock A and 60% in
Stock B. What is the sensitivity to the portfolio of a 1% rise in
inflation?
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