There Is a 30 Percent Probability That a Particular Stock

Multiple Choice

There is a 30 percent probability that a particular stock will earn a 17 percent return and a 70 percent probability that it will earn 11 percent.What is the risk-free rate if the risk premium on the stock is 8.60 percent?

A) 4.20 percent
B) 4.80 percent
C) 5.20 percent
D) 5.40 percent
E) 5.80 percent