Question: Suppose you observe the following situation: Security Beta Expected Return Pete Corp. 1.85 .195 Repete Co. 1.54 .168 Assume these securities are correctly priced. Based

Suppose you observe the following situation:
Security Beta Expected Return
Pete Corp. 1.85 .195
Repete Co. 1.54 .168

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

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