$(6-8)$ As an equity analyst you are concerned with what will happen to the required return for

Required Rate Universal Toddler's stock as market conditions change. Suppose $r_{kF}=5\%,r_M=12\%,$ and

of Return $,b_{UT}=1\mathrm{.}4.$

a$.$ Under current conditions, what is $r_{UT}$ the required rate of return on UT stock?

b$.$ Now suppose $r_{kP}(1)$ increases to $6\%$ or $(2)$ decreases to $4\%.$ The market risk premium,

$R{P}_M,($i$.$e$.,$ the slope of the $SML)$ remains constant. How would this affect $r_M$ and $r_{UT}?$