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Suppose there are two independent economic factors, M1 and M2. The risk-free rate is 7%, and all stocks have independent firmspecific components with a standard

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Suppose there are two independent economic factors, M1 and M2. The risk-free rate is 7%, and all stocks have independent firmspecific components with a standard deviation of 55%. Portfolios A and B are both well diversified. Required: What is the expected return-beta relationship in this economy? (Do not round intermediate calculations, Round your answers to decimal places.)

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