The correct answer is B. 4.00%.
The risk-free rate of return is the rate of return that an investor expects to receive on an investment with no risk. It is often used as a benchmark for other investments, such as stocks and bonds. The risk-free rate of return is determined by a number of factors, including the current level of interest rates, the inflation rate, and the perceived risk of the investment.
In this case, the required return is 15% and the premium for risk is 11%. This means that the investor expects to earn a return of 15% on the investment, plus an additional 11% to compensate for the risk of the investment. The risk-free rate of return can be calculated by subtracting the premium for risk from the required return. Therefore, the risk-free rate of return in this case is 15% – 11% = 4.00%.
Option A is incorrect because it is the sum of the required return and the premium for risk. Option C is incorrect because it is the required return plus the premium for risk plus the risk-free rate of return. Option D is incorrect because it is the risk-free rate of return divided by the premium for risk.