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Suppose rRF = 4%, rM = 9%, and bi = 1.5. What is ri, the required rate of return on Stock i? Round your answer to one decimal place. 1. Now assume that rRF remains at 4%, but rM increases 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   %. 2. Now assume that rRF remains at 4%, but rM falls to 8%. 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   %.

Suppose rRF = 4%, rM = 9%, and bi = 1.5. What is ri, the required rate of return on Stock i? Round your answer to one decimal place. 1. Now assume that rRF remains at 4%, but rM increases 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   %. 2. Now assume that rRF remains at 4%, but rM falls to 8%. 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   %.

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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Suppose rRF = 4%, rM = 9%, and bi = 1.5.

  1. What is ri, the required rate of return on Stock i? Round your answer to one decimal place.
  2. 1. Now assume that rRF remains at 4%, but rM increases 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   %.

    2. Now assume that rRF remains at 4%, but rM falls to 8%. 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   %.

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