Question: Suppose you observe the following situation: Security Beta Expected Return Pete Corp. 1.95 0.205 Repete Co. 1.64 0.178 What is the risk-free rate? (Do not
Suppose you observe the following situation:
| Security | Beta | Expected Return | ||||
| Pete Corp. | 1.95 | 0.205 | ||||
| Repete Co. | 1.64 | 0.178 | ||||
What is the risk-free rate? (Do not round intermediate calculations. Round the final answer to 3 decimal places.)
Risk-free rate %
Assume these securities are correctly priced. Based on the CAPM, what is the expected return on the market? (Do not round intermediate calculations. Round the final answers to 2 decimal places.)
| Expected Return on Market | |
| Pete Corp. | % |
| Repete Co. | % |
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