Yashodha, since this is a quiz question I cant give the answer here, but I am going to explain the general concept so you can calculate the answer.
Nov 20 2012 10:36 AM
This question is based on the concept of CAPM (Capital Asset Pricing Model). The formula is Ra=Rf+Beta(Rm-Rf), were Ra is cost of equity, Rf is the risk free rate, and Rm is the excess market prremium. Bu substituting these value you should get the answer.