REQUIRED RATE OF RETURN
Suppose rRF = 5%, rM = 9%, and bi = 2.
1. Now suppose rRF increases to 6%. The slope of the SML remains constant. How would this affect rM and ri?
2. Now suppose rRF decreases to 4%. The slope of the SML remains constant. How would this affect rM and ri?
1. Now assume that rRF remains at 5%, but rM increases to 10%. The slope of the SML does not remain constant. How would these changes affect ri? Round your answer to two decimal places.
The new ri will be
2. Now assume that rRF remains at 5%, but rM falls to 8%. The slope of the SML does not remain constant. How would these changes affect ri? Round your answer to two decimal places.
The new ri will be
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