A stock has a reguired return of 1290, the risk-free rate is 4.590, and the market risk premium is 390.
a. What is the stock's beta? Round your answer to two decimal places.
b. If the market risk premium increased to 590, what would happen to the stock's reguired rate of return? Assume that the risk-free rate and the beta remain unchanged. Do not round
intermediate calculations. Round your answer to two decimal places.
I. If the stock's beta is egual to 1.0, then the change in reguired rate of return will be less than the change in the market risk premium.
II. If the stock's beta is greater than 1.0, then the change in reguired rate of return will be greater than the change in the market risk premium.
III. If the stock's beta is less than 1.0, then the change in reguired rate of return will be greater than the change in the market risk premium.
IV. If the stock's beta is greater than 1.0, then the change in reguired rate of return will be less than the change in the market risk premium.
V. If the stock's beta is egual to 1.0, then the change in reguired rate of return will be greater than the change in the market risk premium.
Stock's reguired rate of return will be __ %