5. What will happen to a stock's risk premium if its beta doubles and the market risk premium doubles? 2. The risk premium will increase by a factor of 4. b. The risk premium will increase by a factor of 2. c. The risk premium will decrcase by a factor of 2 d. The risk premium will be unchanged. 6. Based on the CAPM model, a stock with a negative beta has which of the following characteristics? An expected return less than zero b. An expected return less than the risk-free rate c. Since these are so rare, the CAPM model does not account for negative beta stocks d. An expected retum equal to the risk-free rate 7. The market portfolio of stocks increases in value by 1.8%. You have a stock with a beta of -0.2 What is the percentage change in the price of the stock? 2.-0.90% b. -0.36% C.-0.20% d. -1.00% 8. The beta of a portfolio is: 2. The geometric average of the beta of the securities in the portfolio b. The market value weighted average beta of the securities in the portfolio c. A measure of the correlation of betas of the securities in the portfolio d. Always greater than one