Required rate of return
Suppose rRF = 4%, rM = 13%, and bi = 1.3.
What is ri, the required rate of return on Stock i? Round your answer to two decimal places.
........%
1. Now assume that rRF remains at 4% but rM increases to 14%. 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 4% but rM falls to 12%. 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 .......%