The stock is currently selling for $15.25 per share, and its noncallable $1,000 par value, 20 -year, 7.25% bonds with semiannual payments are selling for $875.00. The beta is 1.25 , the yield on a 6-month Treasury bill is 3.50%, and the yield on a 20 -year Treasury bond is 5.50%. The required return on the stock market is 11.50%, but the market has had an average annual return of 14.50% during the past 5 years. The firm's tax rate is 40%. Refer to Exhibit 11.1. Based on the CAPM, what is the firm's cost of common stock? 11.15% 11.73% 12.35% (D) 13.00% (E) 13.65%