of a stock Assuming that the CAPM holds, holding all else equal, if the then the required rate of return of the stock increases. O Systematic risk; increases O Market risk; decreases Stand-alone risk: decreases O Idiosyncratic risk; increases Which of the following statements is true? S1: The CAPM equation expresses the classic trade-off between risk and return. Essentially what you can see is that investors require compensation for taking on stand-alone risk. S2: CAPM assumes that investors are on average risk-averse. This means that investors need to be compensated to take on systematic risk i.e. stocks with higher betas will have higher equilibrium expected rates of return. O S2 is correct but S1 is false O S1 is correct but S2 is false O Both statements are correct O Both statements are false