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Suppose you observe the following situation: Security Beta Expected Return Pete Corp. 1.85 .195 Repete Co. 1.54 .168 1-What is the risk-free rate? 2- Assume

Suppose you observe the following situation:

Security Beta Expected Return

Pete Corp. 1.85 .195

Repete Co. 1.54 .168

1-What is the risk-free rate?

2- Assume these securities are correctly priced. Based on the CAPM, what is the expected return on the market?

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