08- R&R (Homework from End of Chapter Problems) 323 Suppose ne-6%, a. What is r, the required rate of return on Stock i? Round your answer to one decimal place. % b. 1. Now suppose rar increases to 7%. The slope of the SML remains constant. How would this affect and r? eBook H Problem Walk-Through Select 13%, and b, 1.2. 1. Both n and r, will increase by 1 percentage point. II. will remain the same and r, will increase by 1 percentage point. III. t will increase by 1 percentage point and r, will remain the same. IV. Both ry and r, will decrease by 1 percentage point. V. Both ry and r, will remain the same. 2. Now suppose rar decreases to 5%. The slope of the SML remains constant. How would this affect to andr 1. Tu will remain the same and r, will decrease 1 percentage point. 11. Both n and r, will increase by 1 percentage point. III. Both n and n will remain the same. IV. Both TH and r, will decrease by 1 percentage point. V. TH will decrease by 1 percentage point and it will remain the same. -Select V c. 1. Now assume that nur remains at 6%, but r increases to 14%. The slope of the SML does not remain constant. How would these changes affect r7 Round your answer to one decimal place. The new n will be 2. Now assume that rur remains at 6%, but ne falls to 12%. The slope of the SML does not remain constant. How would these changes affect n? Round your answer to one decimal place. The new r. will be