Question: Suppose the Treasury bond yield is 3% and the return on the S&P 500 is 10%. AT&T's stock price is $33.50. AT&T has a beta

Suppose the Treasury bond yield is 3% and the return on the S&P 500 is 10%. AT&T's stock price is $33.50. AT&T has a beta of 0.50 and a standard deviation of 3.5%. What should be the required rate of return on AT&T stock?

A. 24.50%

B. 3.71%

C. 6.50%

D. 7.00%

E. 10.00%

Using the CAPM formula. I keep getting 7.5% (0.075) as my answer. what is the procedure to solve this problem?

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