Question 1 5 pts The beta of a stock is a measure of the sensitivity of its returns to the changes in market returns. O a measure of diversifiable risk of a security the rate at which the market portfolio responds to the changes in macroeconomic changes. O a measure of the financial risk of a security. Question 2 10 pts The current beta of a portfolio is 1.5. The current market risk premium is 6% and the required return of the market is 10%. If the portfolio beta declines to 1.0, the market risk premium increases to 8% and inflation declines from 3% to 2%, the required return of the portfolio is 11%. 99. 10% 4%