A stock you are holding has a beta of 2.0 and the stock is currently in equilibrium. The required rate of return on the stock is 16% versus a required return on an average stock of 10%. Now the required return on an average stock increases by 40.0% (not percentage points). The risk-free rate is unchanged. What would the required return on your stock as a result of this event?

1. 24%

2. 22%

3. 23%

4. 21%