Problem 13-27 SML (LO4) Suppose you observe the following situation: Security Pete Corp. Repete Co. Pete Corp. Repete Co. Beta 1.90 1.59 Assume these securities are correctly priced. Based on the CAPM, what is the expected return on the market? (Do not round intermediate calculations. Round the final answers to 2 decimal places.) Expected Return on Market Risk-free rate Expected Return 0.200 0.173 What is the risk-free rate? (Do not round intermediate calculations. Round the final answer to 3 decimal places.) %
Problem 13-27 SML (LO4) Suppose you observe the following situation: Security Pete Corp. Repete Co. Pete Corp. Repete Co. Beta 1.90 1.59 Assume these securities are correctly priced. Based on the CAPM, what is the expected return on the market? (Do not round intermediate calculations. Round the final answers to 2 decimal places.) Expected Return on Market Risk-free rate Expected Return 0.200 0.173 What is the risk-free rate? (Do not round intermediate calculations. Round the final answer to 3 decimal places.) %
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:Problem 13-27 SML (LO4)
Suppose you observe the following situation:
Security
Pete Corp.
Repete Co.
Beta
Pete Corp.
Repete Co.
1.90
1.59
Expected Return
0.200
0.173
Assume these securities are correctly priced. Based on the CAPM, what is the expected return on the market? (Do not round
intermediate calculations. Round the final answers to 2 decimal places.)
Expected Return on Market
What is the risk-free rate? (Do not round intermediate calculations. Round the final answer to 3 decimal places.)
Risk-free rate
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