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Suppose you observe the following situation: Security Beta Expected Return Pete Corp. 1.55 .165 Repete Co. 1.24 .138 Assume these securities are correctly priced. Based

Suppose you observe the following situation:

Security

Beta

Expected Return

Pete Corp.

1.55

.165

Repete Co.

1.24

.138

Assume these securities are correctly priced. Based on the CAPM, what is the expected return on the market? (Do not round intermediate calculations and round your answers to 2 decimal places. (e.g., 32.16))

Expected return on market

$ %

What is the risk-free rate? (Do not round intermediate calculations and round your answer to 2 decimal places. (e.g., 32.16))

Risk-free rate

%

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