Suppose r_RF = 5%, r_M = 10%, and b_i = 0.950.

a. What is r_i, the required rate of return on Stock i?

b. Now suppose that r_RF increases to 6% and the slope of the SML remains constant. Recalculate r_i?

c. Now assume that r_RF remains at 5% but r_M falls to 8%. The slope of the SML does not remain constant. Recalculate r_i?

Question 9 options:

	a)9.750%; b)10.750%; c)7.850%
	a)14.500%; b)10.750%; c)7.850%
	a)9.250%; b)10.250%; c)7.700%
	a)9.750%; b)9.800%; c)7.850