Answered step by step
Verified Expert Solution
Link Copied!

Question

...
1 Approved Answer

Number 10 please help Suppose MRF = 4%, IM = 9%, and bi = 1.5. a. What is n, the required rate of return on

image text in transcribed

Number 10 please help

image text in transcribed
Suppose MRF = 4%, IM = 9%, and bi = 1.5. a. What is n, the required rate of return on Stock i? Round your answer to one decimal place. % b. 1. Now suppose FF increases to 5%. The slope of the SML remains constant. How would this affect ry and ri? I. Both rM and ri will decrease by 1 percentage point. II. Both ry and r will remain the same. III. Both rM and ri will increase by 1 percentage point. IV. IM will remain the same and in will increase by 1 percentage point. V. I'M will increase by 1 percentage point and ri will remain the same. -Select- # 2. Now suppose rap decreases to 3%. The slope of the SML remains constant. How would this affect rM and ri? I. IM will decrease by 1 percentage point and ri will remain the same. II. ry will remain the same and in will decrease by 1 percentage point. Ill. Both rM and ri will increase by 1 percentage point. IV. Both IM and ri will remain the same. V. Both rM and ri will decrease by 1 percentage point. -Select- # c. 1. Now assume that RF remains at 4%, but IM increases to 10%. The slope of the SML does not remain constant. How would these changes affect ri? Round your answer to one decimal place. The new ri will be %. 2. Now assume that rap remains at 4%, but ry falls to 8%. The slope of the SML does not remain constant. How would these changes affect n? Round your answer to one decimal place. The new ri will be

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access with AI-Powered Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Corporate Finance

Authors: Jonathan Berk and Peter DeMarzo

3rd edition

978-0133097894

Students also viewed these Finance questions