Suppose there are two independent economic factors, M1 and M2. The risk-free rate is 7%, and all stocks have independent firm- specific components with a standard deviation of 50%. Portfolios A and B are both well diversified. Portfolio Beta on Mi 1.8 2.0 Beta on M2 2.1 -0.5 Expected Return (%) 40 10 B 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(rp) = = % + BP1 + Bp2