Suppose there are two independent economic factors, M1 and M2. The risk-free rate is 6%, and all stocks have independent firm-specific components with a standard deviation of 54%. Portfolios A and B are both well diversified.

What is the expected returnbeta relationship in this economy? (Do not round intermediate calculations. Round your answers to 2 decimal places.)

Suppose there are two independent economic factors, M, and M. The risk-free rate is 6%, and all stocks have independent firm- specific components with a standard deviation of 54%. Portfolios A and B are both well diversified. Portfolio hy Beta on hy Beta on 1.7 Expected Return (3) What is the expected return-beta relationship in this economy? (Do not round intermediate calculations. Round your answers to decimal places.) Expected retum-beta relationship (P) BP1 +