REQUIRED RATE OF RETURN Suppose rRF 9%, rM 14%, and bi 1 3. a. What is ri,
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REQUIRED RATE OF RETURN Suppose rRF 9%, rM 14%, and bi 1 3.
a. What is ri, the required rate of return on Stock i?
b. Now suppose that rRF (1) increases to 10% or (2) decreases to 8%. The slope of the SML remains constant. How would this affect rM and ri?
c. Now assume that rRF remains at 9% but rM (1) increases to 16% or (2) falls to 13%.
The slope of the SML does not remain constant. How would these changes affect ri?AppendixLO1
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Fundamentals Of Financial Management Concise Edition
ISBN: 9781285065137
8th Edition
Authors: Eugene F. Brigham, Joel F. Houston
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