Assume that the expected rate of return for a stock with a beta of 0.8 is 11.7

Question:

Assume that the expected rate of return for a stock with a beta of 0.8 is 11.7 percent and that the expected return to the market is 14 percent. What must the risk-free rate be?

a. 2.50%

b. 3.25%

c. 4.40%

d. 5.27%

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