QUESTIONS 3 a) The risk-free rate is 3% and the market risk portfolio is 8%. Stock A has beta of 1.2 while stock B has a beta of 0.8. i) Calculate the value required rate of return on each stock. ii) Assume that investors become less willingness to take on risk, so the market risk portfolio rises from eight percent to ten percent. Assume that the risk- free rate remains constant. Find the new required rate of return on the two stocks. ii) Briefly explain why the changes happen. b) Briefly explain the following terms: i) Systematic risk Unsystematic risk Single asset iv) Portfolio investment