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Suppose there are two Independent economic factors, Mand M2. The risk-free rate is 6%, and all stocks have independent firm-specific components with a standard deviation

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Suppose there are two Independent economic factors, Mand M2. The risk-free rate is 6%, and all stocks have independent firm-specific components with a standard deviation of 46%. Portfolios A and Bare both well diversified. Portfolio Beta on M1 1.5 2.0 Beta on M2 2.1 -0.6 Expected Return (%) 36 14 3 What is the expected return-beta relationship in this economy. (Do not round Intermediate calculations. Round your answers to 2 decimal places.) BPE SP2 Expected return-beta relationship (P) =

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