Suppose there are two independent economic factors, $M_1$ and $M_2.$ The risk$-$free rate is $5\%,$

and all stocks have independent firm$-$specific components with a standard deviation of

$52\%.$ Portfolios A and $B$ are both well diversified.

Required:

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 $E(r_P)=$

$5\mathrm{.}00$

$\%+$