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Suppose that you know that the following well-diversified portfolios are fairly priced in a two-factor economy where the risk-free rate is 5%. Determine the risk

Suppose that you know that the following well-diversified portfolios are fairly priced in a two-factor economy where the risk-free rate is 5%. Determine the risk premiums associated with each factor and compute the expected market risk premium for the next period based on these figures.

BETA 1 BETA 2 E(R)
p1 1.00 -.5 10%
p2 -.5 1.5 10%

PLEASE I WANT STEP BY STEP ANSWER REPLY. DONT WRITE DIRECT ANSWERS

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