Question
Suppose rRF = 5%, rM = 9%, and bi = 2.1. a. What is ri, the required rate of return on Stock i? Round your
Suppose rRF = 5%, rM = 9%, and bi = 2.1.
a. What is ri, the required rate of return on Stock i? Round your answer to two decimal places. %
2. Now assume that rRF remains at 5%, but rM falls to 8%. The slope of the SML does not remain constant. How would these changes affect ri? Round your answer to two decimal places. The new ri will be %.
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Fixed Income Securities Tools For Todays Markets
Authors: Bruce Tuckman, Angel Serrat
4th Edition
1119835550, 978-1119835554
