Question: Suppose you observe the following situation: Security Beta Expected Return Peat Co. 1.20 11.0 Re-Peat Co. .80 9.5 Assume these securities are correctly priced. Based

Suppose you observe the following situation:

Security Beta Expected Return
Peat Co. 1.20 11.0
Re-Peat Co. .80 9.5

Assume these securities are correctly priced. Based on the CAPM, what is the expected return on the market? What is the risk-free rate?

Expected return % Risk-free rate %

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