Nile Foods stock has a beta of 1.4 and Elbe Eateries stock has a beta of 0.7. Assume that the risk-free rate, rRF, is 5.5 percent and the market risk premium, (rM rRF), equals 4 percent. Which of the following statements is most correct?

• A. If expected inflation increases but the market risk premium remains unchanged, the required return on both stocks will increase by the same amount.
• B. If expected inflation increases but the market risk premium remains unchanged, the required return will increase for both stocks but the increase will be larger for Nile since it has a higher beta.
• C. The standard deviation of returns for Niles Food's stock will be higher than the standard deviation of returns for Elbe Eateries' stock.
• D. If the market risk premium decreases but the risk-free rate remains unchanged, the required return on both stocks will decline by the same amount.
• E. If the market risk premium increases but the risk-free rate remains unchanged, Niles required return will increase (since it has a beta greater than 1.0) but Elbes will decline (since it has a beta less than 1.0).