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Problem 1 3 - 2 7 SML [ LO 4 ] Suppose you observe the following situation: table [ [ Security , Beta,Expected Return

Problem 13-27 SML [LO4]
Suppose you observe the following situation:
\table[[Security,Beta,Expected Return],[Pete Corporation,1.95,.205],[Repete Company,1.64,.178]]
a. Assume these securities are correctly priced. Based on the CAPM, what is the expected return on the market? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g.,32.16.)
b. What is the risk-free rate? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g.,32.16.)
\table[[a. Expected return on market,%
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