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10. Problem 8.12 (Required Rate of Return) eBook Problem Walk-Through Suppose rri = 5%, I'M = 9%, and b = 1.8. a. What is ri, the required rate of return on Stock Round your answer to one decimal place. b. 1. Now suppose IRF increases to 6%. The slope of the SML remains constant. How would this affect rand n? I. PM will remain the same and will increase by 1 percentage point. II. T will increase by 1 percentage point and will remain the same. III. Both i'm and n will decrease by 1 percentage point. IV. Both rm and n will remain the same. V. Both rm and will increase by 1 percentage point. -Select- 2. Now suppose rre decreases 4%. The slope of the SML remains constant. How would this affect im and ? 1. Both rm and will decrease by 1 percentage point. II. T will decrease by 1 percentage point and r will remain the same. III. r will remain the same and will decrease by 1 percentage point. IV. Both rm and will increase by 1 percentage point. V. Both rm and will remain the same. -Select- C. 1. Now assume that Pre remains at 5%, but I'm increases to 10%. The slope of the SML does not remain constant. How would these changes affect 1,2 Round your answer to one decimal place. The new r will be 2. Now assume that ref remains at 5%, but im falls to 8%. The slope of the SML does not remain constant. How would these changes affect r? Round your answer to one decimal place. The new n will be %

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