As an equity analyst, you are concerned with what will happen to the required rate of return for Stetson$$s stock as market conditions change with the pandemic.

Suppose the current risk$-$free rate is $3\%,$ the required rate of return on the market is $10\%$ and the beta for the Stetston stock is $1\mathrm{.}4.$

I. Under current conditions, what is the required rate of return on Stetson$$s stock?

II$.$ Suppose that the economic conditions is expected to result in a $2\%$ inflation premium. How will this impact the return on the market and the return on Stetson$$s stock?

III. Suppose the inflation fears are not realized but the supply chain glut results in an increase in the risk premium of $3\%$ in the economy, how would this impact the return on Stetson$$s stock?