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Suppose you observe the following situation: Pete Corp: Beta = 1.4 and Expected Return = 15% RePete Corp: Beta = 0.9 and Expected Return =

Suppose you observe the following situation: Pete Corp: Beta = 1.4 and Expected Return = 15% RePete Corp: Beta = 0.9 and Expected Return = 11.5% Assume these securities are correctly priced. Based on the CAPM, what is the expected return on the market? What is the risk-free rate?

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