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Please help. I have 11.26 for RM2 but get the wrong answer for RM1 (4.44 or4.43) Problem 7-33 Suppose there are two independent economic factors,
Please help. I have 11.26 for RM2 but get the wrong answer for RM1 (4.44 or4.43)
Problem 7-33 Suppose there are two independent economic factors, M, and M2. The risk-free rate is 5%, and all stocks have independent firm- specific components with a standard deviation of 48%. Portfolios A and B are both well diversified Portfolio Expected Return (%) Beta on M1 1.6 2.2 Beta on M2 2.3 -0.6 B 8 What is the expected return-beta relationship in this economy? (Do not round intermediate calculations. Round your answers to 2 decimal places.) Expected return-beta relationship E(rP) = 5.00 % + 11.26 BP1+ 4.44:BP2Step by Step Solution
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