Question: I need the answer for RP2 Problem 10-4 Suppose that there are two independent economic factors Fi and Fx The risk-free rate is 7%, and

I need the answer for RP2 I need the answer for RP2 Problem 10-4 Suppose that there are

Problem 10-4 Suppose that there are two independent economic factors Fi and Fx The risk-free rate is 7%, and all stocks have independent firm- specific components with a standard deviation of 47%. Portfolios A and B are both well-diversified with the following properties Portfolio Beta on F1 Beta on 2 Expected Return 2.2 2015 What is the expected return-beta relationship in this economy? Calculate the risk-free rate, if, and the factor risk premiums, RR and RP, to complete the equation below. (Do not round intermediate calculations. Round your answers to two decimal places.) Elip) =11+(BAIRR) + (BP2 RP2) RP2

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