Risk-free rate of return:	4.25%
Beta of Stock Z:	1.50
Market return:	12%
Average return of Stock Z:	14.75%

Given the above information, if an investor's required rate of return is 16.25%, determine whether an investment in Stock Z will be warranted.

A)

Yes, because the average rate of return on Stock Z is very impressive.

B)

No, because the investors required rate of return exceeds the expected rate of return on Stock Z.

C)

Yes, because the expected rate of return exceeds the risk-adjusted return on Stock Z.

D)

No, because the beta on Stock Z is 50% greater than the overall market.