Suppose r_{RF} = 4%, r_{M} = 12%, and b_{i} = 1.2.

2. Now suppose r_{RF} decreases to 3%. The slope of the SML remains constant. How would this affect r_{M} and r_{i}?

- What is r
_{i}, the required rate of return on Stock i? Round your answer to one decimal place.% - 1. Now suppose r
_{RF}increases to 5%. The slope of the SML remains constant. How would this affect r_{M}and r_{i}?- r
_{M}will remain the same and r_{i}will increase by 1 percentage point. - r
_{M}will increase by 1 percentage point and r_{i}will remain the same. - Both r
_{M}and r_{i}will decrease by 1 percentage point. - Both r
_{M}and r_{i}will remain the same. - Both r
_{M}and r_{i}will increase by 1 percentage point.

-Select-IIIIIIIVV

- Both r
_{M}and r_{i}will remain the same. - Both r
_{M}and r_{i}will decrease by 1 percentage point. - r
_{M}will decrease by 1 percentage point and r_{i}will remain the same. - r
_{M}will remain the same and r_{i}will decrease by 1 percentage point. - Both r
_{M}and r_{i}will increase by 1 percentage point.

- r
- 1. Now assume that r
_{RF}remains at 4%, but r_{M}increases to 13%. The slope of the SML does not remain constant. How would these changes affect r_{i}? Round your answer to one decimal place.The new r_{i}will be %.2. Now assume that r

_{RF}remains at 4%, but r_{M}falls to 11%. The slope of the SML does not remain constant. How would these changes affect r_{i}? Round your answer to one decimal place.The new r

_{i}will be %. Get Finance homework help today