Suppose rRF=4%,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 5%. The slope of the SML remains constant. How would this affect rm and ri ? I. Both rm and ri will increase by 1 percentage point. II. rM will remain the same and ri will increase by 1 percentage point. III. rM will increase by 1 percentage point and ri will remain the same. IV. Both rm and ri will decrease by 1 percentage point. V. Both rM and ri will remain the same. 2. Now suppose rRF decreases to 3%. The slope of the SML remains constant. How would this affect rmm and ri ? I. rM will decrease by 1 percentage point and ri will remain the same. II. rM will remain the same and ri will decrease by 1 percentage point. III. Both rm and ri will increase by 1 percentage point. IV. Both rM and ri will remain the same. V. Both rM and ri will decrease by 1 percentage point. c. 1. Now assume that rRF remains at 4%, but r M increases to 12%. 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 rRF remains at 4%, but rM falls to 10%. The slope of the SML does not remain constant. How would these changes affect ri ? Round your answer to one decimal place. 2. Now suppose rRF decreases to 3%. The slope of the SML remains constant. How would this affect rm and ri ? I. r M will decrease by 1 percentage point and ri will remain the same. II. rM will remain the same and ri will decrease by 1 percentage point. III. Both rM and ri will increase by 1 percentage point. IV. Both rm and ri will remain the same. V. Both rm and ri will decrease by 1 percentage point. c. 1. Now assume that rRF remains at 4%, but rm increases to 12%. 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 rRF remains at 4%, but rM falls 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