According to the capital asset pricing model: Multiple Choice A stock with a beta of 1 will see its expected rate of return increase by 20% if its beta rises to 1.2, all else constant. There is an inverse relationship between risk and return. A stock with a beta of 2.0 will see its return decline by 2% should the risk-free rate decline from 3% to 2%, all else constant. a A stock which earns a higher rate of return than the market should have a beta which is greater than 1.0