Suppose That Over the Last 25 Years,company DEF Has Averaged

Multiple Choice

Suppose that over the last 25 years,company DEF has averaged a return of 7.5%.Over the same period,the Treasury bond rate has averaged 1.5%.The current estimate of the Treasury bond rate is 4%.Using the historical approach,what is the estimate of DEF's expected return.

A) 13.0%
B) 12.5%
C) 12.0%
D) 10.0%