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As an equity analyst you are concerned with what will happen to the required return to Universal Toddler s stock as market conditions change. Suppose
As an equity analyst you are concerned with what will happen to the required return to Universal Toddlers stock as market conditions change. Suppose rRF rM and bUT a Under current conditions, what is rUT, the required rate of return on UT stock? b Now suppose rRF increases to or decreases to The slope of the SML remains constant. How would this affect rM and rUT? c Now assume rRF remains at but rM increases to or falls to The slope of the SML does not remain constant. How would these changes affect rUT?
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