Question: please solve step by step and clearly thank you 1. THY stock has an expected return of 19 percent with a beta of 1.7, while

please solve step by step and clearly thank you 1. THY

please solve step by step and clearly thank you

1. THY stock has an expected return of 19 percent with a beta of 1.7, while Pegasus stock has an expected return of 14 percent with a beta of 1.2. Assume the CAPM is true. What is the expected return on the market? What is the risk-free rate? Note: beta of the market is one, CAPM is defined with security market line. (25 points)

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