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.
The solution explains how to calculate the required rate of return on a stock.