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Suppose you observe the following situation. Assume the two securities are correctly priced. Based on CAPM, what is the expected return of the market? What

Suppose you observe the following situation. Assume the two securities are correctly priced. Based on CAPM, what is the expected return of the market? What is the risk free rate?

Security

Beta

Expected Rturn

Pete Co.

1.21

10.79%

Repete Co.

0.83

8.43%

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