Following are the beta coefficients for four stocks that Charlie wants to purchase:

Company Beta

Ford Motor Company 2.5

General Mills 0.2

Microsoft 1.0

Wells Fargo & Company 1.4

The nominal risk-free rate of return, rRF, is 2 percent, and the market rate risk premium is 7 percent. (a) Compute the required rate of return for each stock. (b) Compute the required rate of return for each stock if the market risk premium is 5 percent rather than 7 percent. (c) Explain why the return on each stock did not change by the same amount.