uppose r2F=6%,rM=11%, and bj=1.6 a. What is n. the required rate of return on Stock i? Round your answer to one decimal place. % b. 1. Now suppose rov increases to 7%. The slope of the SML remains constant. How would this affect rM and n ? I. Both r and n will increase by 1 percentage point. II. m, will remain the same and n will increase by 1 percentage point. 111. rm will increase by 1 percentage point and r, will remain the same. IV. Both rmm and n will decrease by 1 percentage point. V. Both fm and n will remain the same. 2. Now suppose re decreases to 5%. The slope of the SML remains constant. How would this affect rm and n ? 1. Both rm and n will remain the same. 11. Both rM and n will decrease by 1 percentage point. III. FM will decrease by 1 percentage point and n will remain the same. IV. fmM will remain the same and n will decrease by 1 percentage point. V. Both r and n will increase by 1 percentage point. c. 1. Now assume that naf remains at 6%, but n increases to 12%. The slope of the SML does not remain constant. How would these change affect n ? Round your answer to one decimal place. The new n will be %. 2. Now assume that rm remains at 6%, but rmm falls to 10%. The slope of the SML does not remain constant. How would these changes aff n ? Round your answer to one decimal place. The new nill be %