10. Suppose or 3%, 9%, and by 1.8. a. What is the required rate of return on Stock 17 Round your answer to one decimal place. % b. 1. Now suppose rrf increases to 4%. The slope of the SML remains constant. How would this affect rm and n? 1. Both rand i will remain the same. 11. Both rm and will increase by 1 percentage point. III. T will remain the same and will increase by 1 percentage point. IV. T will increase by 1 percentage point and n will remain the same. V. Both rm and will decrease by 1 percentage point. -Select- 26 2. Now suppose rar decreases to 2%. The slope of the SML remains constant. How would this affect rm and ? 1. Both rm and n will decrease by 1 percentage point. II. r will decrease by 1 percentage point and n will remain the same. III. will remain the same and n will decrease by 1 percentage point. IV. Both rand n will increase by 1 percentage point. V. Both rm and n will remain the same. -Select- c. 1. Now assume that for remains at 3%, but increases to 10%. The slope of the SML does not remain constant. Ho would these changes affect n? Round your answer to one decimal place. The new n will be %. 2. Now assume that ref remains at 3%, but falls to B%. The slope of the SML does not remain constant. How woul these changes affect np Round your answer to one decimal place. The new n will be % A mutual fund manager has a $20 million portfolio with a beta of 1.4. The risk-free rate is 2.5%, and the market risk premium is 9%. The manager expects to receive an additional $5 million, which she plans to invest in a number of stocks. After investing the additional funds, she wants the fund's required return to be 16%. What should be the average beta of the new stocks added to the portfolio? Negative value, if any, should be indicated by a minus sign. Do not round intermediate calculations. Round your answer to one decimal place