Problem:
The stock of Big Joe's has a beta of 1.50 and an expected return of 12.60 percent. The risk-free rate of return is 5.1 percent.
Required:
What is the expected return on the market?
15.15 percent
8.60 percent
4.95 percent
10.10 percent
7.50 percent
Note: Provide support for your rationale.