The Reserve Bank of Australia Expects the Inflation Rate in Australia

The Reserve Bank of Australia expects the inflation rate in Australia to be 4.50% and financial analysts evaluate the risk-premium on small company shares to be 3.70% for the year.The Commonwealth Government's T-notes yield is expected to be 8% for the next year.What rate of return is expected to be earned on small-company stocks over the next year?

A) 8.20%
B) 4.50%
C) 11.20%
D) 11.70%
E) 12.23%