Suppose there are two independent economic factors, $M_1$ and $M_2.$ The risk$-$free rate is $7\%,$ and all stocks have independent firmspecific components with a standard deviation of $43\%.$ Portfolios A and $B$ are both well diversified.

$\backslash$table$[[$Portfolio$,$Beta on $M_1,$Beta on $M_2,$Expected Return $(\%)],[$A$,1\mathrm{.}5,2\mathrm{.}5,33],[B,2\mathrm{.}4,-0\mathrm{.}5,11]]$

Required:

What is the expected return$-$beta relationship in this economy?

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

Expected return$-$beta relationship $E(r_P)=q,\%+$

${}_{P1}+q,{}_{P2}$B