Question: Suppose you observe the following situation: Security Beta Expected Return Pete Corp. 1.15 0.129 Repete Co. 0.84 0.102 Assume these securities are correctly priced. Based
| Suppose you observe the following situation: |
| Security | Beta | Expected Return | ||||
| Pete Corp. | 1.15 | 0.129 | ||||
| Repete Co. | 0.84 | 0.102 | ||||
| Assume these securities are correctly priced. Based on the CAPM, what is the expected return on the market? (Do not round intermediate calculations and round your answer to 2 decimal places. (e.g., 32.16)) |
| Expected return on market | |
| Pete Corp. | % |
| Repete Co. | % |
| What is the risk-free rate? (Do not round intermediate calculations and round your answer to 2 decimal places. (e.g., 32.16)) |
| Risk-free rate | % |
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