Attempts: Score: 75 7. Problem 8.12 (Required Rate of Return) eBook Problem Walk-Through Suppose rre = 5%, rm = 13%, and b; = 1.9. a. What is ri, the required rate of return on Stock i? Round your answer to one decimal place. % b. 1. Now suppose rrf increases to 6%. The slope of the SML remains constant. How would this affect rm and r? I. rm will increase by 1 percentage point and r; will remain the same. II. Both rm and r, will decrease by 1 percentage point. III. Both rm and will remain the same. IV. Both rm and r will increase by 1 percentage point. V. rm will remain the same and will increase by 1 percentage point. -Select- 2. Now suppose rre decreases to 4%. The slope of the SML remains constant. How would this affect rm and r? I. Both rm and i will increase by 1 percentage point. II. Both rm and will remain the same. III. Both rm and will decrease by 1 percentage point. IV. rm will decrease by 1 percentage point and i will remain the same. V. rm will remain the same and r; will decrease by 1 percentage point. -Select- c. 1. Now assume that ree remains at 5%, but rm increases to 14%. The slope of the SML does not remain constant. How would these changes affect ri? Round your answer to one decimal place. The new r will be 2. Now assume that ree remains at 5%, but rm falls to 12%. The slope of the SML does not remain constant. How would these changes affect r ? Round your answer to one decimal place. The new r will be %