8-12

Problem 8-12 Required rate of return suppose rRF 8%, rM 13%, and bi 1.5. a. What is r, the required rate of return on stock i? Round your answer to two decimal places b. 1. Now suppose rRF increases to 9%. The slope of the sML remains constant. How would this affect M and n? I. Both rM and n will decrease by 1%. II. Both rM and r will remain the same. III. Both rM and n will increase by 1%. IV. will remain the same and n will increase by 1%. V. nM will increase by 1% and n will remain the same. 2. Now suppose nR decreases to 7%. The slope of the sML remains constant. How would this affect n? M and I. Both nM and n will decrease by 1%. II. rM will decrease by 1% and n will remain the same. III. rM will remain the same and r will decrease by 1%. IV. Both rM and n will increase by 1%. V. Both rM and ri will remain the same Select