Question: Suppose TRF = 5%, IM = 13%, and b = 1.3. a. What is n, the required rate of return on Stock i? Round your

Suppose TRF = 5%, IM = 13%, and b = 1.3. 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 rand n? I. I will remain the same and r will increase by 1 percentage point. II. rm will increase by 1 percentage point and n will remain the same. III. Both rm and n will decrease by 1 percentage point. IV. Both rm and n will remain the same. V. Both rm and n will increase by 1 percentage point. -Select- 2. Now suppose rre decreases to 4%. The slope of the SML remains constant. How would this affect rm and n? I. Both rm and n will remain the same. II. Bothrm and will decrease by 1 percentage point. III. rm will decrease by 1 percentage point and n will remain the same. IV. rm will remain the same and will decrease by 1 percentage point. V. Both rm and n will increase by 1 percentage point. -Select- 2. Now suppose ne decreases to 4%. The slope of the SML remains constant. How would this affect im and n? 1. Both rm and n will remain the same. II. Both and will decrease by 1 percentage point. III. will decrease by 1 percentage point and n will remain the same. IV. T will remain the same and will decrease by 1 percentage point, V. Both r and n will increase by 1 percentage point -Select- c. 1. Now assume that the remains at 5%, but increases to 14%. The slope of the SML does not remain congant. How would these changes affect n? Round your answer to one decimal place. The new n will be 2. Now assume that the remains at 5%, but rm falls to 12%. The slope of the SML does not remain constant. How would these changes affec 1.? Round your answer to one decimal place. The new will be
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