Question: Suppose Riskfree rate (Rf) = 9%, Market return (Rm) = 14%, and beta = 1.3. The required rate of return of stock i is: 15.5%

Suppose Riskfree rate (Rf) = 9%, Market return (Rm) = 14%, and beta = 1.3. The required rate of return of stock i is: 15.5%

Now suppose that Rf increased to 10%, and the slope of the SML remains constant. What is the market return Rm?

a) 13%

b) 14%

c) 15%

d) 16%

e) 17%

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