Question: Suppose TRF = 5%, IM = 12%, and bi = 1.2. a. What is n, the required rate of return on Stock i? Round your

Suppose TRF = 5%, IM = 12%, and bi = 1.2.

Suppose TRF = 5%, IM = 12%, and bi = 1.2. a. What is n, the required rate of return on Stock i? Round your answer to one decimal place. % b. 1. Now suppose rrf increases to 6%. The slope of the SML remains constant. How would this affect rm and n? I. rm will increase by 1 percentage point and i will remain the same. II. Both rm and ri will decrease by 1 percentage point. III. Both rm and i will remain the same. IV. Both rm and ri will increase by 1 percentage point. V. I will remain the same and will increase by 1 percentage point. -Select- 2. Now suppose IRF decreases to 4%. The slope of the SML remains constant. How would this affect rm and n? I. Both rm and ri will remain the same. II. Both rm and will decrease by 1 percentage point. III. IM will decrease by 1 percentage point and ri will remain the same. IV. rm will remain the same and r will decrease by 1 percentage point. V. Both rm and i will increase by 1 percentage point. C. -Select- 1. Now assume that rrr remains at 5%, but rm increases to 13%. The slope of the SML does not remain constant. How would these changes affect ni? Round your answer to one decimal place. The new r will be %. 2. Now assume that rri remains at 5%, but rm falls to 11%. The slope of the SML does not remain constant. How would these changes affect ri? Round your answer to one decimal place. The new n will be %

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