Required return on Stock = Risk-free return + (Market risk premium)(Stock's beta) If a stock's expected return plots on or above the SML, then the stock's return is to compensate the investor for risk. If a stock's expected return plots below the SML, the stock's return is to compensate the investor for risk. through changes in the amount of debt it uses. Quantitative Problem: You are given the following information for Wine and Cork Enterprises (WCE): rRF=2%;rM=8%;RPM=6%, and beta =1.4 What is WCE's required rate of return? Do not round intermediate calculations. Round your answer to two decimal places. % % % %