Problem 6-08 Required Rate of Return As an equity analyst you are concerned with what will happen to the required return to Universal Toddler' stock as market conditions change. Suppose RF = 7%, r": 10%, and bUT = 2.1 a. Under current conditions, what is ruT, the required rate of return on UT Stock? Round your answer to two decimal places. b. Now suppose rRF increases to 8%. The slope of the SML remains constant. How would this affect rM and rUT? -Select-T . rM will remain the same and rUT will increase by 196 11. rM will increase by 1% and rUT will remain the same III. Both rM and ruT will decrease by 1% IV.Both rM and ruT will remain the same. V. Both TM and rUT will increase by 1% c. Suppose RF decreases to 6%. The slope of the SML remains constant. How would this affect TH and rur? -Select- I. Both rM and ruT will remain the same 11. Both rM and rUT will decrease by 1%. 111. rM will decrease by 1% and ruT will remain the same. IV. rM will remain the same and rUT will decrease by 196. V. Both TM and rUT will increase by 1% d. Now assume rRF remains at 7% but rM increases to 12%. The slope of the SML does not remain constant. How would these changes affect rur? -Select- I. ruT will remain the same 11. ruT will increase by 4.2%. 111. ruT will decrease by 4.2%. e. Assume rRF remains at 7% but rM falls to 9%. The slope of the SML does not remain constant. How would these changes affect rut? -select- I. rUT will increase by 2.1%. II. ruT will remain the same. 111ruT will decrease by 2.1%