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Portfolio Beta M1 Beta M2 Expected Return A 1.5 1.9 34% B 1.8 (-0.6) 12% Suppose there are two independent economic factors, M1 and M2.

Portfolio Beta M1 Beta M2 Expected Return
A 1.5 1.9 34%
B 1.8 (-0.6) 12%

Suppose there are two independent economic factors, M1 and M2. The risk-free rate is 5%. Portfolios A and B are both well diversified. What are M1 and M2s expected risk premiums?

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