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Suppose you observe the following situation: Security Beta Expected Return Pete Corp. 1.15 0.129 Repete Co. 0.84 0.102 Assume these securities are correctly priced. Based

Suppose you observe the following situation:

Security Beta Expected Return

Pete Corp. 1.15 0.129

Repete Co. 0.84 0.102

Assume these securities are correctly priced. Based on the CAPM,

(a) what is the expected return on the market? (b)What is the risk-free rate?

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