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Suppose you observe the following situation: Security Beta Expected Return Peat Co. 1.20 10.6 Re-Peat Co. .80 9.3 Assume these securities are correctly priced. Based
Suppose you observe the following situation: |
Security | Beta | Expected Return |
Peat Co. | 1.20 | 10.6 |
Re-Peat Co. | .80 | 9.3 |
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. Omit the "%" sign in your response.) |
Expected return | % |
Risk-free rate | % |
|
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