Suppose that there are two independent economic factors f1, Financial Management

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Suppose that there are two independent economic factors f1

Solve the given problem

Suppose that there are two independent economic factors, F1 and F2. The risk-free rate is 8%, and all stocks have independent firm-specific components with a standard deviation of 38%. The following are well-diversified portfolios:

Portfolio	Beta on F₁	Beta on F₂	Expected Return
A	1.4	1.8	28%
B	2.3	-0.18	25%

What is the expected return-beta relationship in this economy? (Do not round intermediate calculations. Round your answer to the nearest whole number. Omit the "%" sign in your response.)

E(r_P) = % + (ß_P1 × %) + (ß_P2 × %)

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Financial Management: Suppose that there are two independent economic factors f1

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