Suppose that there are two independent economic factors, $F_1$ and $F_2.$ The risk$-$free rate is $3\%,$ and allistocks have independent firm$-$

specific components with ${?}_{\frac{?}{?}}$ standard deviation of $52\%.$ Portfolios A and $B$ are both well$-$diversified with the following properties:

Required:

What is the expected return$-$beta relationship in this economy? Calculate the risk$-$free rate, $r,$ and the factor risk premiums, $R{P}_1$ and $R{P}_2$

to complete the equation below.

Note: Do not round intermediate calculations. Round your answers to $2$ decimal places.

$E(r_P)=r_f+({}_{P1}R{P}_1)+({}_{P2}R{P}_2)$

Suppose that there are two independent economic factors, $F_1$ and $F_2.$ The risk$-$free rate is $3\%,$ and all stocks have independent firm$-$

specific components with a standard deviation of $52\%.$ Portfolios A and $B$ are both well$-$diversified with the following properties:

Required:

What is the expected return$-$beta relationship in this economy? Calculate the risk$-$free rate, $rf,$ and the factor risk premiums, $R{P}_1$ and $R{P}_2$

to complete the equation below.

Note: Do not round intermediate calculations. Round your answers to $2$ decimal places.

$E(rp)=r_f+({}_{P}R{P}_1)+({}_{P}R{P}_2)$

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