$68$ Last year, Michael invested primarily in fixed$-$income securities but, he was unhappy with the performance of his portfolio. He pursued a more aggressive investment strategy this year by purchasing more equities. Assume the stock market is expected to return $14\%$ this year and the return on assets, such as GICs and T$-$bills, is estimated to be $3\mathrm{.}5\%.$ If Michael chooses a stock with a beta of $1\mathrm{.}4,$ what is his required rate of return on the stock?

The required rate of return $(rr)$ formula is: $r_r=[r_f+((r_m-r_f)B)]$

where:

$r_f=$ the risk$-$free return

$r_m=$ the anticipated return from the market as a whole

$B=$ the beta factor

a$)15\mathrm{.}40\%$

b$)17\mathrm{.}25\%$

c$)18\mathrm{.}20\%$

d$)19\mathrm{.}60\%$