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Suppose there are two independent economic factors, M 1 and M 2 . The risk - free rate is 4 % , and all stocks

Suppose there are two independent economic factors, M1 and M2. The risk-free rate is 4%, and all stocks have independent firm-specific components with a standard deviation of 41%. Portfolios A and B are both well diversified.
Portfolio Beta on M1 Beta on M2 Expected Return (%)
A 1.82.331
B 2.2-0.59
Required:
What is the expected returnbeta relationship in this economy? (Do not round intermediate calculations. Round your answers to 2 decimal places.)
Expected Return-beta relationship E(rp)=_____%+_____Bp1+_______Bp2

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