Suppose stock returns can be explained by a two factor model The firm specific risks for all stocks are independent The following table shows the information for two diversified portfolios 1 2 3 Portfolio A 89 1 19 18 Portfolio B 1 49 29 16 If the risk free rate is 6 percent, what are the risk premiums for each factor in this model (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e g , 32 16 ) Factor F1 Factor F2

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Question: Suppose stock returns can be explained by a two-factor model. The firm-specific risks for all stocks are independent. The following table shows the information for

Suppose stock returns can be explained by a two-factor model. The firm-specific risks for all stocks are independent. The following table shows the information for two diversified portfolios:

	1	2	3
Portfolio A	.89	1.19	18%
Portfolio B	1.49	-.29	16

If the risk-free rate is 6 percent, what are the risk premiums for each factor in this model? (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.)

Factor F1	___________	%
Factor F2	___________	%

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