Suppose rRF = 9%, rM = 14%, and bi = 1.3. a. What is ri, the required
Question:
a. What is ri, the required rate of return on Stock i?
b. Now suppose that rRF (1) increases to 10% or (2) decreases to 8%. The slope of the SML remains constant. How would this affect rM and ri?
c. Now assume that rRF remains at 9% but rM (1) increases to 16% or (2) falls to 13%. The slope of the SML does not remain constant. How would these changes affect ri?
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a r i r RF r M r RF b i 9 14 913 155 b 1 r RF increases to 10 r M increases by ...View the full answer
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Related Book For 
Fundamentals of Financial Management
ISBN: 978-0324664553
Concise 6th Edition
Authors: Eugene F. Brigham, Joel F. Houston
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