Question: Suppose you observe the following situation: Security Beta Expected Return A 1.25 0.108 B 0.87 0.082 Assume these securities are correctly priced. Based on the

Suppose you observe the following situation:
Security Beta Expected Return
A 1.25 0.108
B 0.87 0.082
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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