Stock A has a beta of 0.7, whereas Stock B has a beta of 1.3. Portfolio P has 50% invested in both A and B. Which of the following would occur if the market risk premium decreased by 1% but the risk-free rate remained constant?

a. The required return on Portfolio P would increase by 1%.

b. The required return on both stocks would decrease by 1%.

c. The required return on Portfolio P would remain unchanged.

d. The required return on Stock A would decrease by less than 1%, while the return on Stock B would increase by more than 1%.

e The required return for Stock A would fall, but the required return for Stock B would increase.