There are two independent economic factors, M1 and M2. The risk-free rate is 5%, and all stocks have independent firm-specific components with a standard deviation of 25%. Portfolios A and B are well diversified. Given the data below, which equation provides the correct pricing model? Portfolio Beta on M1 Beta on M2 E[rp] A 1.5 1.75 35% B 1.0 0.65 20% Elrp) = 5 + 1.12B P1 + 11.86BP2 Elrp) = 5 +4.96B P1 + 13.26BP2 Erp) = 5 + 3.23B P1 +8.46BP2 O Elrp) = 5 + 8.716 p1 +9.683 p2