only answer e) and f)

7-11. SML Assume that the risk free rate is 2%, the market risk premium is 5%, and the beta of two stocks A and B are 1.4 and 0.8, respectively. a. Calculate both stocks' required rates of return. Answer b. What would be the return on an average stock? Answer Explain the significance of a security with a 0 beta. What would be this security's required return? T ( d. Assume that the economy worsens and that investors correspondingly revise their attitudes toward stocks, Would this change be better reflected in a shift in the market risk premium to 3.5% or 6.5%? e. Based on your answer to (d), what would be the new required return for stocks A and B? Would you expect stock prices for A and B to fall or rise? Answy f. Ignoring (d) and (e) above, assume that inflationary expectations were revised upward by 0.5%. What would be the change to required returns for stocks A and B? Would their prices fall or rise? Answer 17 da standard