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Suppose r R F = 9 % , r M = 1 5 % , and b i = Stock i ' s beta =
Suppose and Stock is beta
a Calculate the required rate of return on Stock
b If increases to and the slope of the SML Security Market Line remains constant, calculate and
c If decreases to and the slope of the SML Security Market Line remains constant, calculate and
d Now assume remains at but increases to from If the slope of the SML does not remain constant, calculate
e Now assume remains at but decreases to from If the slope of the SML does not remain constant, calculate
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