eBook 1 Problem Walk-Through Suppose rf - 4%, M = 12%, and b - 1.7. a. What is n, the required rate of return on Stock i? Round your answer to one decimal place. % b. 1. Now suppose tre increases to 5%. The slope of the SML remains constant. How would this affect rm and n? 1. Both rm and will decrease by 1 percentage point. II. Both rand n will remain the same. III. Both rm and n will increase by 1 percentage point. IV. will remain the same and n will increase by 1 percentage point. V. rm will increase by 1 percentage point and r will remain the same. -Select- 2. Now suppose rre decreases to 3%. The slope of the SML remains constant. How would this affect rm and n? I. TM will decrease by 1 percentage point and n will remain the same. II. rm will remain the same and will decrease by 1 percentage point. III. Both rm and r will increase by 1 percentage point. IV. Both rm and will remain the same. V. Both rm and r will decrease by 1 percentage point. -Select- c. 1. Now assume that rre remains at 4%, but r increases to 13%. The slope of the SML does not remain constant. How would these changes affect n? Round your answer to one decimal place. The new n will be % 2. Now assume that rRF remains at 4%, but rm falls to 11%. The slope of the SML does not remain constant. How would these changes affect r? Round your answer to one decimal place. The new n will be %