Question
Suppose you observe the following situation: Security Beta Expected Return Peat Company 1.40 12.20 Re-Peat Company 0.70 10.10 Assume these securities are correctly priced. Based
Suppose you observe the following situation:
| Security | Beta | Expected Return |
|---|---|---|
| Peat Company | 1.40 | 12.20 |
| Re-Peat Company | 0.70 | 10.10 |
Assume these securities are correctly priced. Based on the CAPM, what is the expected return on the market? What is the risk-free rate?
Note: Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.
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Fundamentals Of Corporate Finance
Authors: Berk, Peter DeMarzo, Jarrad Harford
3rd Global Edition
1292018402, 9781292018409
