Calculate the Required Rate of Return for Mars Inc

Calculate the required rate of return for Mars Inc.'s stock. The Mars's beta is 1.2, the rate on a T-bill is 4 percent, the rate on a long-term T-bond is 6 percent, the expected return on the market is 11.5 percent, the market has averaged a 14 percent annual return over the last six years, and Mars has averaged a 14.4 return over the last six years.

A) 12.6%
B) 13.2%
C) 14.0%
D) 15.6%
E) 16.2%

Correct Answer:

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