4. Problem 6-08 (Required Rate of Return) Required Rate of Return a. Under current conditions, what is rut, the required rate of return on UT Stock? Round your answer to one decimal place. % b. 1. Now suppose rrf Increases to 5%. The slope of the SML remains constant. How would this affect rm and rut? I. Both rm and U will remain the same. II. Both mm and rut will Increase by 1 percentage point. III. IM will remain the same and rUu will increase by 1 percentage point. IV. r m will increase by 1 percentage point and rut will remain the same. V. Both rm and rut will decrease by 1 percentage point. 2. Now suppose rrf decreases to 3%. The slope of the SML remains constant. How would this affect rM and nut? I. Both rm and U will remain the same. II. Both rm and rut will decrease by 1 percentage point. III. rM will decrease by 1 percentage point and nut will remain the same. IV. rm will remain the same and rut will decrease by 1 percentage polnt. V. Both rm and nut will increase by 1 percentage point. C, 1. Now assume rRf remains at 4% but rm increases to 14%. The slope of the 5ML does not remain constant. How would these changes affect rut? I. nut will increase by 2.6 percentage point. II. U will remain the same. III. rut will decrease by 2.6 percentage point. 2. Now assume rrf remains at 4% but rM falls to 11%. The slope of the SML does not remain constant. How would these changes affect rut? I. rut will decrease by 1.3 percentage point. II. ut will remain the same. III. rut will increase by 1.3 percentage point