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Suppose you observe the following situation: Security Beta Expected Return Peat Co. 1.10 10.8 Re-Peat Co. .85 9.4 Assume these securities are correctly priced. Based

Suppose you observe the following situation:

Security	Beta	Expected Return
Peat Co.	1.10	10.8
Re-Peat Co.	.85	9.4

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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