Assume that the risk-free rate (RF) is 4 percent; the required rate of return on the market, R[RM], is 8%; and the market beta of Primary Healthcare is 1.2. Using the Security Market Line (SML), calculate the required rate of return on Primary Healthcare stock.

a) 4.0% b)10.4% c) 11.2% d) 14.0%

PLEASE EXPLAIN.