Lisa Miller at Basket Wonders (BW) is attempting to determine the rate of return required by their stock investors. Lisa is using a 6% Risk free rate (rf) and a long-term market expected rate of return of 10%. A stock analyst following the firm has calculated that the firm beta is 1.2. What is the required rate of return on the stock of Basket Wonders?

9.8%

8.9%

10.8%