Suppose there are two independent economic factors,

M_(1)

and

M_(2)

. The risk-free rate is

4%

, and all stocks have independent firmspecific components with a standard deviation of

53%

. Portfolios

A

and

B

are both well diversified.\ \\\\table[[Portfolio,Beta on

M_(1)

,Beta on

M_(2)

,Expected Return (%)],[

A

,1.7,1.9,32],[

B

,1.8,-0.7,13]]\ 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))=

\

%+

\

\\\\beta _(P1)+

\

\\\\beta _(P2)