Bell Weather, Inc. has a beta of 1.25. The return on the market portfolio is 12.5%,

Bell Weather, Inc. has a beta of 1.25. The return on the market portfolio is 12.5%, and the risk-free rate is 5%. According to CAPM, what is the required return on this stock?
A.  14.37%
B.  9.37%
C.  20.62%
D.  15.62%

Solution