Mulherin's stock has a beta of 1.23, its required return is 11.75%, and the risk-free rate is 4.30%. What is the required rate of return on the market?

A risk premium is an additional risk required by a common stockholder in exchange for taking the additional risk of investing in that particular stock.
It denotes the distinction between market risk-return and risk-free return.

To find the rate of return:

The required market rate of return is calculated as follows:

Required return = Risk-free rate + (Beta × (Market return - Risk-free rate))

11.75% = 2.3% + (1.23 × (Market return - 2.3%))
1.23 × (Market return - 2.3%) = 11.75% - 2.3%
1.23 × (Market return - 2.3%) = 9.45%
Market return - 2.3% = 7.68%
Market return = 7.68% + 2.3%
Market return = 9.98%

Therefore, the required rate of return on the market is 9.98%.

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The correct question is given below:

Mulherin's stock has a beta of 1.23, its required return is 11.75%, and its risk-free rate is 2.30%. What is the required rate of return on the market?