Consider the multi factor APT with two factors. The risk premiums on the factor 1 and factor 2 portfolios are 4% and 5%, respectively. Stock A has a beta of 1.2 on factor-1, and a beta of 0.7 on factor-2. The expected return on Stock A is 12%. If no arbitrage opportunties exist, the risk-free rate of return is

a. 6.0%

b.3.7%

c. 7.4%

d. 6.5%