Suppose rRF=3%,rM=11%, and bi=1.6. a. What is ri, the required rate of return on Stock i? Round your answer to one decimal place. b. 1. Now suppose rRF increases to 4%. The slope of the SML remains constant. How would this affect rM and r1 ? I. Both rM and r1 will remain the same. II. Both rM and ri will increase by 1 percentage point. III. rM will remain the same and ri will increase by 1 percentage point. IV. rM will increase by 1 percentage point and r1 will remain the same. V. Both rM and r1 will decrease by 1 percentage point. - 2. Now suppose rRF decreases to 2%. The slope of the SML remains constant. How would this affect rM and r1 ? I. Both rM and r1 will increase by 1 percentage point. II. Both rM and ri will remain the same. III. Both rM and r1 will decrease by 1 percentage point. IV. rM will decrease by 1 percentage point and r1 will remain the same. V. rM will remain the same and ri will decrease by 1 percentage point. c. Now assume that rRF remains at 3%, but rM increases to 12%. The slope of the SML does not remain constant. How would these changes affect r1 ? Round your answer to one decimal place. 1. The new ri will be %. 2. Now assume that rRF remains at 3%, but rM falls to 10%. The slope of the SML does not remain constant. How would these changes affect r1 ? Round your answer to one decimal place. The new r1 will be %