3. [Problem P 8-20 on textbook P. 390] Below is a summary of the revised problem

Microsoft Stock has a beta of 1.50.

(1) If the market return increased by 10%, what impact would this change be expected to have on Microsoft stocks return?

(2) If the market return decreased by 12%, what impact would this change

be expected to have on Microsoft stocks return?

(3) Would Microsoft stock be considered more or less risky than the

market?