The graph plots four equations, A, B, C, and D: Line A joins ordered pair negative 6, 16 and 9, negative 4. Line B joins ordered pair negative 2, 20 and 8, 0. Line C joins ordered pair negative 7, negative 6 and 6, 20. Line D joins ordered pair 7, 20 and 0, negative 7. Which pair of equations has (2, 12) as its solution?

b

step-by-step explanation:

required rate of return = 0.166 = 16.6%

step-by-step explanation:

under the capital asset pricing model (capm), the required or expected rate of return for a particular security or asset is given using the formula:

required rate of return = risk-free rate + beta*(market risk premium)

we are given that;

risk-free rate = 4% = 0.04

beta = 1.4

market risk premium = 9% = 0.09

we simply plug these values into the above formula;

required rate of return = 0.04 + 1.4*(0.09)

required rate of return = 0.04 + 0.126

required rate of return = 0.166 = 16.6%