Finch Incs preferred stock pays a dividend of $5 every six months. If the price of the stock is $50.00, what is its nominal (not effective) annual rate of return?

		25%
		10%
		5.00%
		20%

Assume that investors have recently become more risk averse, so the market risk premium has increased. Also, assume that the risk-free rate and expected inflation have not changed. Which of the following is most likely to occur?

		The required rate of return for a stock with a beta of 1 will increase.
		The required rate of return for a stock with a beta of 1 will decrease.
		The required rate of return for a stock with a beta of 1 will remain unchanged.
		The required rate of return for a stock with a beta of 1 can decrease, increase or remain unchanged depending on the investor's preferences.