Question: Suppose you observe the following situation: Security Beta Expected Return Peat Co. 1.20 11.6 Re-Peat Co. 0.70 9.8 Assume these securities are correctly priced. Based

Suppose you observe the following situation:

Security	Beta	Expected Return
Peat Co.	1.20	11.6
Re-Peat Co.	0.70	9.8

Assume these securities are correctly priced. Based on the CAPM, what is the expected return on the market? What is the risk-free rate? (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.)

Expected return on market = ______%

Risk-free rate = ________%

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