Now, suppose the Federal Reserve Board increases the money supply, causing the risk-free rate, R F, to drop to 3% and r m to fall to 10%. What would this do to the price of Upton Company's stock?

a) SML variables: R F = _________%; r m = __________%; b = __________.

Solve the SML equation to find r s.

B)

Gordon Model variables: D 1 = $ __________; g = _________%; r s = __________%**

**Note that r s is the solution to the SML equation just solved.

Solve the Gordon Model equation to find P o.