Stock R has a beta of 1.8, Stock S has a beta of 0.45, the required return on an average stock is 10%, and the risk-free rate of return is 5%. By how much does the required return on the riskier stock exceed the required return on the less risky stock?

a.

7.75%

b.

7.80%

c.

6.85%

d.

6.75%

e.

8.45%