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Suppose that Federal Reserve actions have caused an increase in the risk-free rate. Meanwhile, investors are afraid of a recession, so the market risk premium

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Suppose that Federal Reserve actions have caused an increase in the risk-free rate. Meanwhile, investors are afraid of a recession, so the market risk premium has increased. Under these conditions, with other things held constant, which of the following statements is most correct? The prices of all stocks would decline, but the decline would be greater for low-beta stocks. The required return on all stocks would increase, but the increase would be greatest for high-beta stocks. The prices of all stocks would increase, but the increase would be greatest for high-beta stocks. Stocks' required returns would change, but so would expected returns, and the result would be no change in stocks prices. The required return on all stocks would increase by the same amount

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