Question: Problem 1 2 - 1 5 Relative Valuation ( LO 3 , CFA 3 ) Suppose you observe the following situation: SecurityBetaExpected ReturnPeat Company 1

Problem 12-15 Relative Valuation (LO3, CFA3) Suppose you observe the following situation: SecurityBetaExpected ReturnPeat Company1.7013.60Re-Peat Company0.8510.80 Assume these securities are correctly priced. Based on the CAPM, what is the expected return on the market? What is the risk-free rate?

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