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 47%.Portfolios A and B are both well

Saved Suppose there are two independent economic factors, M, and M. The risk-free rate is 7% , and all stocks have independent firm- specific components with a standard deviation of 47 %. Portfolios A and B are both well diversified Beta on M Portfolio Beta on M2 Expected Return (%) A 1.6 2.2 37 B 2.1 -e.6 15 What is the expected return-beta relationship in this economy? (Do not round intermediate calculations. Round your answers to decimal places.) Expected return-beta relationship E(P) 6.34 BP1 7.00 % - 0.09 BP2