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Historical rates of return for the market and for Stock A are given below: Year Market Stock A 1 6.0% 8.0% 2 -8.0 3.0 3

Historical rates of return for the market and for Stock A are given below: Year Market Stock A 1 6.0% 8.0% 2 -8.0 3.0 3 -8.0 -2.0 4 18.0 12.0 If the required return on the market is 11 percent and the risk-free rate is 6 percent, what is the required return on Stock A, according to CAPM/SML theory if Beta is .4534? Select one: a. 8.27% b. 7.25% c. 6.00% d. 7.79% e. 6.57%

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