Question: Suppose rRF = 8%, rM = 13%, and bi = 1.7. What is ri, the required rate of return on Stock i? Round your answer
Suppose rRF = 8%, rM = 13%, and bi = 1.7. What is ri, the required rate of return on Stock i? Round your answer to two decimal places. % Now suppose rRF increases to 9%. The slope of the SML remains constant. How would this affect rM and ri? rM will increase by 1% and ri will remain the same. Both rM and ri will decrease by 1%. Both rM and ri will remain the same. Both rM and ri will increase by 1%. rM will remain the same and ri will increase by 1%. Now suppose rRF decreases to 7%. The slope of the SML remains constant. How would this affect rM and ri? rM will decrease by 1% and ri will remain the same. rM will remain the same and ri will decrease by 1%. Both rM and ri will increase by 1%. Both rM and ri will remain the same. Both rM and ri will decrease by 1%. Now assume that rRF remains at 8% but rM increases to 14%. 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 % Now assume that rRF remains at 8% but rM falls to 12%. 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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