Suppose there are two independent economic factors, M1 and M2. The risk-free rate is 4%, and all stocks have independent firm-specific components with a standard deviation of 49%. Portfolios A and B are both well diversified. Portfolio Beta on M1 Beta on M2 Expected Return (%) A 1.6 2.4 39 B 2.3 -0.7 9

E(rP) = 4% + 5.50% x β(M1) + 10.92% x β(M2)

Step-by-step explanation:

let us recall from the following statement:

The  two independent economic factors are M1 and M2

Th risk free rate = 4%

The standard deviation of all stocks of  independent firm specific components is =49%

P = portfolios for A and B

Now,

What is the expected relationship of return-beta

The Expected return-beta relationship E(rP) =  % +  βp₁ +  βp₂

E(rA) = 4% + 1.6 * M1 + 2.4* M2 = 39%

E(rB) = 4% + 2.3 * M1 + (-0.7)* M2 = 9%

Therefore

Solving for M1 and M2 using excel solver, we have M1 = 5.50% and M2 = 10.92%

E(rP) = 4% + 5.50% x β(M1) + 10.92% x β(M2)

the population of other specie of birds will decline or other specie of birds will find some alternate source of food to survive.

explanation:

according to the competitive exclusion principle, which is also known as gause's law, two specie living in the same niche and feeding on the same resource cannot co-exist stably.

as we have well studied the theory of natural selection which states that only those organisms survive which have better tendency to compete for food and adapt to the environmental conditions.

coming towards the question, what wi ll happen when one species outcompetes the other for the small fish , the other specie will not get enough food and will start to die or decline in population. eventually either other specie needs to find another alternative food source for itself or migrate at some other location where there is less competition otherwise it will just not exist anymore at that niche.

hope it !