Assume that the market is in equilibrium and that stock betas can be estimated with historical data

Assume that the market is in equilibrium and that stock betas can be estimated with historical data. The returns on the market, the returns on United Fund (UF), the risk-free rate, and the required return on the United Fund are shown below. Based on this information, what is the required return on the market?

Year Market UF

2011 -9% -14%

2012 11% 16%

2013 15% 22%

2014 5% 7%

2015 -1% -2%

Risk Free Rate: 7.00% Return on United Fund: 60.00%

Select the correct answer.

a. 42.23% b. 42.13% c. 42.53% d. 42.33% e. 42.43%