Lionel Tricycles has a beta of 0.88 and an expected dividend growth rate of 4.00%...
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Lionel Tricycles has a beta of 0.88 and an expected dividend growth rate of 4.00% per year. The T-bill rate is 4.00%, and the T-bond rate is 5.25%. The annual return on the stock market during the past 4 years was 10.25%. Investors expect the average annual future return on the market to be 11.50%. Using the SML, what is Lionel's required rate of return?
Select one:
a. 11.02%
b. 10.75%
c. 11.58%
d. 11.29%
e. 10.48%
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