5. Stock PQR is expected to provide a constant annual dividend of $4 forever, i.e., there is zero growth expected in the future. PQR is trading for a price of $40 on the exchange (assume the market is efficient and all stocks are priced in equilibrium.) The risk-free rate is 4% and the expected market return is 12%. Assuming that all other variables remain at their original values and the beta of the stock doubles, what is the percentage change in the price of Stock PQR?

1. +60%
2. +37.50%
3. -60%
4. -37.50%
5. None of the above