Question $1$

Facebook has a CAPM beta of $2\mathrm{.}2,$ whereas Vodafone has a CAPM beta of $0\mathrm{.}7.$ Which of the

following statements most follows if the CAPM holds?

The risk premium on vodafone stock is lower than that on facebook stock.

For each one percentage point increase in the market risk premium, Vodafone's required rate of

return increases by more than one percentage point.

Facebook's stock is more volatile than Vodafone's.

Vodafone has more systematic risk than Facebook