Question: Problem 7 . 4 ( b ) Suppose there are two independent economic factors, M 1 and M 2 . The risk - free rate

Problem 7.4(b)
Suppose 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
48%. Portfolios A and B are both well diversified.
What is the risk premium of the M2 factor?(Do not round intermediate calculations. Enter your answer in percentage points. Round your answers to 2 decimal places.)
Problem 7.4(b) Suppose there are two independent economic factors, M1 and

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