What will happen to the expected return on a stock with a beta of 1.5 and a market risk premium of 9% if the Treasury bill yield increases from 3% to 5%?
- The expected return will remain unchanged.
- The expected return will increase by 1.0%.
- The expected return will increase by 2.0%.
- The expected return will increase by 3.0%.
Note: Provide support for your rationale.