Assume these stocks are correctly priced based on the capm


Suppose you observe the following situation:

Stock       Beta  Expected Return

Pete Corp. 1.15   12.9%

Repete Co. 0.84   10.2%

Assume these stocks 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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Financial Management: Assume these stocks are correctly priced based on the capm
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