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 45%. Portfolios A and B are both well diversified.

Portfolio Beta onM₁ Beta onM₂ Expected Return (%)

A 1.5 2.0 35

B 1.9 -0.6 13

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 relationshipE(r_P) =________% +____________P1+_______________P2