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Suppose there are two independent economic factors, M1 and M2. The risk-free rate is 5%. Portfolios A and B are both well diversified. What are

Suppose there are two independent economic factors, M1 and M2. The risk-free rate is 5%. Portfolios A and B are both well diversified. What are M1 and M2s expected risk premiums? Please Show Work!!!! Need Hekp freaking out!

Portfolio

Beta M1

Beta M2

Expected Return

A

1.5

1.9

34%

B

1.8

-0.6

12%

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