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Stock A has a beta of 0.7, whereas Stock B has a beta of 1.3....

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Finance

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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 increased by 1% but the risk-free rate remained constant? a. The required return on Portfolio P would remain unchanged. b. The required return on Stock A would increase by more than 1%, while the return on Stock B would increase by less than 1%. OC. The required return on Portfolio P would increase by 1%. d. The required return on both stocks would increase by 1%. Oe. The required return for Stock A would fall, but the required return for Stock B would increase

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