Problem:
Oak Enterprises has a beta of 1.2, the market return is 8%, and the T-bill rate is 4%.
Requirement:
Question: What is their expected required return of common equity?
- Between 11% and 12%
- Between 8% and 9%
- Between 7% and 8%
- Between 4% and 5%
Note: Please explain comprehensively and give step by step solution.