Q4

A stock has a required return of 11%, the risk-free rate is 5.5%, and the market risk premium is 4%. a. What is the stock's beta? Round your answer to two decimal places. b. If the market risk premium increased to 6%, what would happen to the stock's required rate of return? Assume that the riskfree rate and the beta remain unchanged. Do not round intermediate calculations. Round your answer to two decimal places. I. If the stock's beta is greater than 1.0 , then the change in required rate of return will be less than the change in the market risk premium. II. If the stock's beta is equal to 1.0, then the change in required rate of return will be greater than the change in the market risk premlum. III. If the stock's beta is equal to 1.0 , then the change in required rate of return will be less than the change in the market risk premium. 1V. If the stock's beta is greater than 1.0 , then the change in required rate of return will be greater than the change in the market risk premium. V. If the stock's beta is less than 1.0, then the change in required rate of return will be greater than the change in the market risk premium. ired rate of return will be