You plan to invest in the Kish Hedge Fund, which has total capital of $500 million invested in five stocks: Stock Stock's Beta Coefficient Investment $160 million 0.8 B 120 million 1.1 80 million 2.3 D 80 million 1.0 E 60 million 1.3 Kish's beta coefficient can be found as a weighted average of its stocks' betas. The risk-free rate is 5%, and you believe the following probability distribution for future market returns is realistic: Probability Market Return 0.1 -28% 0.2 0 0.4 11 0.2 28 0.1 45 a. What is the equation for the Security Market Line (SML)? (Hint: First determine the expected market return.) I. r; = 5.0% + (6.7%)b II. r; = 7.0% + (7.4%)b III. r; = 5.0% + (7.5%) IV. ri = 8.7% + (6.7%)b; V. r = 8.7% + (7.5%)b -Select- v b. Calculate Kish's required rate of return. Do not round intermediate calculations. Round your answer to two decimal places. % c. Suppose Rick Kish, the president, receives a proposal from a company seeking new capital. The amount needed to take a position in the stock is $50 million, it has an expected return of 14%, and its estimated beta is 1.4. Should Kish invest in the new company? The new stock -Select- be purchased. At what expected rate of return should Kish be indifferent to purchasing the stock? Round your answer to two decimal places. %