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What is ri, the required rate of return on stock

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Suppose rRF = 9%, rM = 14%, and bi = 1.3.
a. What is ri, the required rate of return on Stock i?
b. Now suppose rRF (1) increases to 10 percent or (2) decreases to 8 percent.
The slope of the SML remains constant. How would this affect rM and ri?
c. Now assume rRF remains at 9 percent but rM (1) increases to 16 percent or (2) falls to 13 percent. The slope of the SML does not remain constant. How would these changes affect ri?

Reference no: EM131100679

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