Answer:
option (c) 11.95%
Explanation:
Data provided in the question:
Beta = 1.40
Risk-free rate, Rf = 4.25%
Market risk premium, Rm = 5.50%
Now,
Required rate of return = Rf + ( beta × Rm )
on substituting the respective values, we get
Required rate of return = 4.25% + ( 1.40 × 5.50% )
= 4.25% + 7.7%
= 11.95%
Hence,
the correct answer is option (c) 11.95%
