The expected return on GreatBiz stock is 14 percent while the expected return on the market is 12 percent. The stock's beta is 1.43. What is the risk-free rate of return? A) 1.22% B) 5.31% C) 7.35% D) 5.50% E) 4.13%

The formula for the expected return on a stock is:

Expected Return = Risk-Free Rate + Beta * (Market Return - Risk-Free Rate)

We can rearrange this formula to solve for the risk-free rate:

Risk-Free Rate = (Expected Return - Beta * Market Return) / (1 - Beta)

Plugging in the given values:

Risk-Free Rate = (0.14 - 1.43 * 0.12) / (1 - 1.43) Risk-Free Rate = (0.14 - 0.1716) / (-0.43) Risk-Free Rate = 0.0316 / (-0.43) Risk-Free Rate ≈ -0.0735

Since a negative risk-free rate does not make sense, we can conclude that there may be an error in the calculations or the given information. None of the answer choices provided are correct.