Question: Suppose rRF = 5%, rM = 9%, and bi = 2.1. a. What is ri, the required rate of return on Stock i? Round your

Suppose rRF = 5%, rM = 9%, and bi = 2.1.

a. What is ri, the required rate of return on Stock i? Round your answer to two decimal places. %

2. Now assume that rRF remains at 5%, but rM falls to 8%. The slope of the SML does not remain constant. How would these changes affect ri? Round your answer to two decimal places. The new ri will be %.

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