a. What is ri, the required rate of return on Stock i? Round your answer to two decimal places. b. 1. Now suppose rrf increases to 4%. The slope of the SML remains constant. How would this affect rm and ri? I. rm will remain the same and ri will increase by 1%. II. rm will increase by 1% and ri will remain the same. III. Both rm and ri will decrease by 1%. IV. Both rm and ri will remain the same. V. Both rm and ri will increase by 1%. -Select- 2. Now suppose rri decreases to 2%. The slope of the SML remains constant. How would this affect rm and ri? I. Both rm and ri will increase by 1%. II. Both rm and ri will remain the same. III. Both rm and ri will decrease by 1%. IV. rm will decrease by 1% and ri will remain the same. V. rm will remain the same and ri will decrease by 1%. -Select- A c. 1. Now assume that ref remains at 3%, but rm increases to 12%. The slope of the SML does not remain constant. How would these changes affect ri? Round your answer to two decimal places. The new ri will be %. 2. Now assume that ree remains at 3%, but rm falls to 10%. The slope of the SML does not remain constant. How would these changes affect ri? Round your answer to two decimal places. The new ri will be %. + NONE a. What is ri, the required rate of return on Stock i? Round your answer to two decimal places. b. 1. Now suppose rrf increases to 4%. The slope of the SML remains constant. How would this affect rm and ri? I. rm will remain the same and ri will increase by 1%. II. rm will increase by 1% and ri will remain the same. III. Both rm and ri will decrease by 1%. IV. Both rm and ri will remain the same. V. Both rm and ri will increase by 1%. -Select- 2. Now suppose rri decreases to 2%. The slope of the SML remains constant. How would this affect rm and ri? I. Both rm and ri will increase by 1%. II. Both rm and ri will remain the same. III. Both rm and ri will decrease by 1%. IV. rm will decrease by 1% and ri will remain the same. V. rm will remain the same and ri will decrease by 1%. -Select- A c. 1. Now assume that ref remains at 3%, but rm increases to 12%. The slope of the SML does not remain constant. How would these changes affect ri? Round your answer to two decimal places. The new ri will be %. 2. Now assume that ree remains at 3%, but rm falls to 10%. The slope of the SML does not remain constant. How would these changes affect ri? Round your answer to two decimal places. The new ri will be %. + NONE
