E(rp) = Risk Free Rate +Beta1*M1 + Beta 2 *M2
37% = 6% + 1.7*M1 + 2.4 M2
10% = 6% + 2.3*M1 - 0.8M2
1.7*M1 + 2.4 M2 = 31% --Equation 1
2.3*M1 - 0.8M2 = 4% ---Equation 2
Multiplying 3 in equation 2 we get
2.3*3*M1 - 2.4M2 = 4%*3-(New equation2)
Adding equation 1 and new equation 2
1.7*M1 + 2.4 M2 = 31%
6.9M1 -2.4M2 =12%
8.6*M1 =43%
M1 =0.43/8.6 =0.05
M2 =0.09375 or 0.09
E(rp) = Risk Free Rate +Beta1*M1 + Beta 2 *M2
=6%+Bp1*0.05+Bp2*0.09
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