Assume that the current real rate of interest is 1%, the inflation premium is 2%, and the market risk premium is 10%. If changes in recent economic events result in a 3% increase in inflationary expectations (i.e., raising the inflation premium to 5%), what will be the change in the required return for a stock with a beta of 1.5 after the changes in inflation premium? Select one:

a. 3.00%

b. 12.50%

c. -1.50%

d. 12.00%