Problem 4. [5 pts] This year, Hammond wanted 8% risk premium to own common stocks given the following information: Based on Bloomberg, a group of financial economists has estimated that the long-run real growth of the Canadian economy over the next 5-year period will only average 1%. In addition, a paper by the Economist Intelligence Unit suggests that the average annual rate of inflation during the same five-year period will be about 3%. If the nominal return Hammond expects on T-bills during this period will be 1.75%, what would his required return be on common stocks to maintain 8% risk premium target. If common stock investors including Hammond became more risk averse, what would happen to the required return on common stocks? (Explain)