Question: Suppose you observe the following situation: Security Beta Expected Return Pete Corp. 1.95 .205 Repete Co. 1.64 .178 Assume these securities are correctly priced. Based
| Suppose you observe the following situation: |
| Security | Beta | Expected Return | ||||
| Pete Corp. | 1.95 | .205 | ||||
| Repete Co. | 1.64 | .178 | ||||
| Assume these securities are correctly priced. Based on the CAPM, what is the expected return on the market? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) |
| Expected return on market | % |
| What is the risk-free rate? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) |
| Risk-free rate | % |
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