A) A stock has a required return of 8%, the risk-free rate is 4.5%, and the market risk premium is 2%. What is the stock's beta? Round your answer to two decimal places.

1.75

B) If the market risk premium increased to 3%, what would happen to the stock's required rate of return? Assume that the risk-free rate and the beta remain unchanged. Do not round intermediate calculations. Round your answer to two decimal places.

I- If the stock's beta is greater than 1.0, then the change in required rate of return will be greater than the change in the market risk premium.

II- If the stock's beta is less than 1.0, then the change in required rate of return will be greater than the change in the market risk premium.

III- If the stock's beta is greater than 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 equal to 1.0, then the change in required rate of return will be greater than the change in the market risk premium.

V- 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.

Which option to choose ?

Stock's required rate of return will be ...%