Suppose IRF = 5%, I'M = 10%, and b; = 1.4. a. What is ri, the required rate of return on Stock i? Round your answer to one decimal place. % b. 1. Now suppose rre increases to 6%. The slope of the SML remains constant. How would this affect rm and r? I. Both rm and r will decrease by 1 percentage point. II. Both rm and i will remain the same. III. Both rm and i will increase by 1 percentage point. IV. rm will remain the same and r; will increase by 1 percentage point. V. rm will increase by 1 percentage point and r; will remain the same. III 2. Now suppose rre decreases to 4%. The slope of the SML remains constant. How would this affect rm and ri? I. Both rm and r; will remain the same. II. Both rm and r; will decrease by 1 percentage point. III. rm will decrease by 1 percentage point and r will remain the same. IV. rm will remain the same and r; will decrease by 1 percentage point. V. Both rm and r will increase by 1 percentage point. II C. 1. Now assume that ree remains at 5%, but rm increases 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 r will be %. 2. Now assume that for remains at 5%, but im falls to 9%. The slope of the SML does not remain constant. How would these changes affect r;? Round your answer to one decimal place. The new r will be %