Suppose the yield to maturity of a Treasury bond is $1\mathrm{.}70\%$ and you expect the S&P $500$ index will have a return of $6\mathrm{.}20\%.$ If company Z has a beta $($

$)$ of $0\mathrm{.}5,$ what should be the expected return on equity $($a$.$k$.$a$.$ cost of equity$)$ of this company according to the CAPM?

Group of answer choices

$3\mathrm{.}10\%$

$2\mathrm{.}25\%$

$4\mathrm{.}80\%$

$3\mathrm{.}95\%$