Question: Suppose rRF = 8%, rM = 9%, and bi = 1.6. A.)What is ri, the required rate of return on Stock i? Round your answer

Suppose rRF = 8%, rM = 9%, and bi = 1.6.

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

B.) Now assume that rRF remains at 8%, but rM increases to 10%. 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 %.

C.) Now assume that rRF remains at 8%, 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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