4. Problem 8.05 (Beta and Required Rate of Return) A stock has a required retum of 13%, the risk. free rate is 2.5%, and the market risk premlitm if 4%. a. What is the stock's beta? Round your answer to two decimal Dhaces. b. If the market risk premium increased to 5%, what would hapoen to the stock's required rate of returm? Assume that the risk.free nate and the beta remain unchanged. Do not round intermediate caloulations. Roind your antwer to two decimal places. I. If the stock's beta is greater than 1.0, then the change in reguired rate of return will be less than the change in the market risk premium. It. If the stock's beta is equal to 1.0, then the change in reguired tate of return wit be greater than the changi in ther market risk premium. IIL. If the stock's beta is equal to 1.0, then the change in required rate of return will be less than the change in the market risk premium. IV. If the stock's beta is greater than 1.0, then the change in recuired rate of refum will be greater than the change in the market risk: premium. V. If the stock's beta is less than 1.0, then the chanoe in regeirnd rate of theim will be greater than the change in the masket ilsk premium. 5tocks required rate of retum will be