There are two stocks you're considering to buy: Stock X and Stock Y. Stock X has a beta of 0.7 and stock Y has a beta of 1.2. Treasury bills have a return rate of 3.00% and the market portfolio has an expected return of 16.00%. Compared to the less risky stock, the riskier stock has:

1. 6.0% lower expected return
2. 6.9% higher expected return
3. 6.5% lower expected return
4. 6.5 higher expected return
5. 6.7 higher expected return