Pam, an analyst at Graffiti Computers (GC), models the stock of the company. Suppose that the risk-free rate rRF = 6.5%, the required market return rM = 12.5%, the risk premium for small stocks rSMB = 3.2%, and the risk premium for value stocks rHML = 4.8%. Suppose also that Pam ran the regression for Graffiti Computerss stock and estimated the following regression coefficients: aGC = 0.00, bGC = 0.9, cGC = 0.2, and dGC = 0.3. If Pam uses a Fama-French three-factor model, then which of the following values correctly reflects the stocks required return?

a. 13.98%

b.3.18%

c. 7.48%

d. 17.94%