HR Industries (HRI) has a beta of 1.3; LR Industries's (LRI) beta is 0.6. The risk-free rate is 6%, and the required rate of return on an average stock is 13%. The expected rate of inflation built into rRF falls by 1.5 percentage points, the real risk-free rate remains constant, the required return on the market falls to 10.5%, and all betas remain constant. After all of these changes, what will be the difference in the required returns for HRI and LRI? Do not round intermediate calculations. Round your answer to two decimal places. You plan to invest in the Kish Hedge Fund, which has total capital of $500 million invested in five stocks: Stock's Beta Coefficient Stock Investment A $160 million 0.6 120 million 1.4 80 million 1.8 80 million 1.0 60 million 1.3 Kish's beta coefficient can be found as a weighted average of its stocks' betas. The risk-free rate is 4%, and you believe the following probability distribution for future market returns is realistic: TT Probability Market Return 0.1 -30% 0.2 0.4 13 0.2 28 0.1 51 a. What is the equation for the Security Market Line (SML)? (Hint: First determine the expected market return.) I. ri 4.0% +(8.9%)bi II. ri 6.2% +(8.5%)bi III. r4.0% (10.5 % ) b IV. r4.9% +(8.9%)bi V. r4.9% +(10.5%)bi -Select- b. Calculate Kish's required rate of return. Do not round intermediate calculations. Round your answer to two decimal places % c. Suppose Rick Kish, the president, receives a proposal from a company seeking new capital. The amount needed to take a position in the stock is $50 million, it has an expected return of 16%, and its estimated beta is 1.4. Should Kish invest in the new company? be purchased The new stock -Select- At what expected rate of return should Kish be indifferent to purchasing the stock? Round your answer to two decimal places