Question: eBook Problem Walk-Through Suppose RF = 6%, M = 12%, and bi = 1.1. a. What is n, the required rate of return on

eBook Problem Walk-Through Suppose RF = 6%, M = 12%, and bi = 1.1. a. What is n, the required rate of return on Stock i? Round your answer to one decimal place. % b. 1. Now suppose RF increases to 7%. The slope of the SML remains constant. How would this affect M and ri? I. m will increase by 1 percentage point and ri will remain the same. II. Both M and ri will decrease by 1 percentage point. III. Both M and ri will remain the same. -Select- IV. Both M and ri will increase by 1 percentage point. V. M will remain the same and ri will increase by 1 percentage point. 2. Now suppose TRF decreases to 5%. The slope of the SML remains constant. How would this affect M and ri? I. Both M and r; will decrease by 1 percentage point. II. m will decrease by 1 percentage point and ri will remain the same. III. M will remain the same and ri will decrease by 1 percentage point. IV. Both M and ri will increase by 1 percentage point. V. Both M and ri will remain the same. -Select- D c. 1. Now assume that RF remains at 6%, but r increases to 13%. The slope of the SML does not remain constant. How would these changes affect ni? Round your answer to one decimal place. The new ri will be %. 2. Now assume that RF remains at 6%, but r falls to 11%. The slope of the SML does not remain constant. How would these changes affect n? Round your answer to one decimal place. The new ri will be %.

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