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Problem 12-15 Relative Valuation (LO3, CFA2) Suppose you observe the following situation: Security Peat Co. Re-Peat Co. Beta 1.70 0.85 Expected Returrn 13.6 10.8 Assume

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Problem 12-15 Relative Valuation (LO3, CFA2) Suppose you observe the following situation: Security Peat Co. Re-Peat Co. Beta 1.70 0.85 Expected Returrn 13.6 10.8 Assume these securities are correctly priced. Based on the CAPM, what is the expected return on the market? What is the risk-free rate? (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.) Answer is complete but not entirely correct. Expected return on market Risk-free rate 20.29 x % 88.29x%

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