Calculate the required rate of return for Mercury Inc., assuming that

Calculate the required rate of return for Mercury Inc., assuming that the real risk-free rate is equal to 4% and the market risk premium (note that is not the same as the market return) is 6%.

Mercury has a beta of 1.5, and its realized rate of return has averaged 15% over the last 5 years.
A) 6%
B) 16%
C) 18%
D) 13%
E) 17%

ANSWER

D