Business, 06.12.2019 19:31, victorialeona81

Suppose that there are two independent economic factors, f1 and f2. the risk-free rate is 5%, and all stocks have independent firm-specific components with a standard deviation of 44%. portfolios a and b are both well-diversified with the following properties: portfolio beta on f1 beta on f2 expected returna 2.0 2.3 34 %b 2.9 –0.23 29 %what is the expected return-beta relationship in this economy? calculate the risk-free rate, rf, and the factor risk premiums, rp1 and rp2, to complete the equation below. (do not round intermediate calculations. round your answers to two decimal places.)e(rp) = rf + (? p1 × rp1) + (? p2 × rp2)rf = %rp1 = %rp2 = %

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Suppose that there are two independent economic factors, f1 and f2. the risk-free rate is 5%, and al...