Asume that to cool off the econongy and decrease expectations for inflation, the Federal Reserve tipheaed the moory sumply, causing an incresse in the rikk$-$free rate, VRY$.$ Investors aluo became concersed that the Fefls actions woeld lead to a recession, and that led to an increase in the market risk pocmium, $(r_{Md}-r_{Rr}).$ Under these coodicioes, with obler thing beld coastant, which of the following statements is most ceerect?

The required return on all stocks would increase by the same amount.

The required return on all stocks would increase, but the increase would be greatest for stocks with betas of less than $1\mathrm{.}0.$

Stocks" required reterns would change, bet so would expected returns, and the result would be mo change in stocka' prices.

The prices of all stocks would decline, but the decline would be greatent for high$-$beta stocks.

The prices of all slocks would increase, but the increase would be greatest for Ligh beta stacks.