You are the operations manager for an airline and you are considering a higher fare level for passengers in aisle seats. How many randomly selected air passengers must you​ survey? Assume that you want to be 99​% confident that the sample percentage is within 4.5 percentage points of the true population percentage. Complete parts​ (a) and​ (b) below.

a. Assume that nothing is known about the percentage of passengers who prefer aisle seats.

n = ?

​(Round up to the nearest​ integer.)

b. Assume that a prior survey suggests that about 29% of air passengers prefer an aisle seat.

n = ?

​(Round up to the nearest​ integer.)

Suppose r_RF = 6%, r_M = 9%, and b_i = 1.8.

1. What is r_i, the required rate of return on Stock i? Round your answer to one decimal place.

     %

2. 1. Now suppose r_RF increases to 7%. The slope of the SML remains constant. How would this affect r_M and r_i?
   1. Both r_M and r_i will remain the same.
   2. Both r_M and r_i will increase by 1 percentage point.
   3. r_M will remain the same and r_i will increase by 1 percentage point.
   4. r_M will increase by 1 percentage point and r_i will remain the same.
   5. Both r_M and r_i will decrease by 1 percentage point.

2. Now suppose r_RF decreases to 5%. The slope of the SML remains constant. How would this affect r_M and r_i?

1. Both r_M and r_i will increase by 1 percentage point.
2. Both r_M and r_i will remain the same.
3. Both r_M and r_i will decrease by 1 percentage point.
4. r_M will decrease by 1 percentage point and r_i will remain the same.
5. r_M will remain the same and r_i will decrease by 1 percentage point.

1. Now assume that r_RF remains at 6%, but r_M increases to 10%. The slope of the SML does not remain constant. How would these changes affect r_i? Round your answer to one decimal place.

The new r_i will be   %.

2. Now assume that r_RF remains at 6%, but r_M falls to 8%. The slope of the SML does not remain constant. How would these changes affect r_i? Round your answer to one decimal place.

The new r_i will be   %.

Suppose r_RF = 3%, r_M = 12%, and b_i = 1.2.

2. Now suppose r_RF decreases to 2%. The slope of the SML remains constant. How would this affect r_M and r_i?

-Select-IIIIIIIVVItem 3

1. What is r_i, the required rate of return on Stock i? Round your answer to one decimal place.

     %

2. 1. Now suppose r_RF increases to 4%. The slope of the SML remains constant. How would this affect r_M and r_i?
   1. Both r_M and r_i will remain the same.
   2. Both r_M and r_i will increase by 1 percentage point.
   3. r_M will remain the same and r_i will increase by 1 percentage point.
   4. r_M will increase by 1 percentage point and r_i will remain the same.
   5. Both r_M and r_i will decrease by 1 percentage point.

   -Select-IIIIIIIVVItem 2

   1. Both r_M and r_i will decrease by 1 percentage point.
   2. r_M will decrease by 1 percentage point and r_i will remain the same.
   3. r_M will remain the same and r_i will decrease by 1 percentage point.
   4. Both r_M and r_i will increase by 1 percentage point.
   5. Both r_M and r_i will remain the same.

1. 1. Now assume that r_RF remains at 3%, but r_M increases to 13%. The slope of the SML does not remain constant. How would these changes affect r_i? Round your answer to one decimal place.

   The new r_i will be   %.

   2. Now assume that r_RF remains at 3%, but r_M falls to 11%. The slope of the SML does not remain constant. How would these changes affect r_i? Round your answer to one decimal place.

   The new r_i will be   %.

Suppose r_RF = 3%, r_M = 12%, and b_i = 1.4.

2. Now suppose r_RF decreases to 2%. The slope of the SML remains constant. How would this affect r_M and r_i?

-Select-IIIIIIIVVItem 3

1. What is r_i, the required rate of return on Stock i? Round your answer to one decimal place.

     %

2. 1. Now suppose r_RF increases to 4%. The slope of the SML remains constant. How would this affect r_M and r_i?
   1. Both r_M and r_i will decrease by 1 percentage point.
   2. Both r_M and r_i will remain the same.
   3. Both r_M and r_i will increase by 1 percentage point.
   4. r_M will remain the same and r_i will increase by 1 percentage point.
   5. r_M will increase by 1 percentage point and r_i will remain the same.

   -Select-I II III IV V

   1. Both r_M and r_i will decrease by 1 percentage point.
   2. r_M will decrease by 1 percentage point and r_i will remain the same.
   3. r_M will remain the same and r_i will decrease by 1 percentage point.
   4. Both r_M and r_i will increase by 1 percentage point.
   5. Both r_M and r_i will remain the same.
3. 1. Now assume that r_RF remains at 3%, but r_M increases to 13%. The slope of the SML does not remain constant. How would these changes affect r_i? Round your answer to one decimal place.

   The new r_i will be   %.

   2. Now assume that r_RF remains at 3%, but r_M falls to 11%. The slope of the SML does not remain constant. How would these changes affect r_i? Round your answer to one decimal place.

   The new r_i will be   %.

Suppose r_RF = 6%, r_M = 12%, and b_i = 1.7.

2. Now suppose r_RF decreases to 5%. The slope of the SML remains constant. How would this affect r_M and r_i?

-Select-IIIIIIIVVItem 3

1. What is r_i, the required rate of return on Stock i? Round your answer to one decimal place.

     %

2. 1. Now suppose r_RF increases to 7%. The slope of the SML remains constant. How would this affect r_M and r_i?
   1. r_M will remain the same and r_i will increase by 1 percentage point.
   2. r_M will increase by 1 percentage point and r_i will remain the same.
   3. Both r_M and r_i will decrease by 1 percentage point.
   4. Both r_M and r_i will remain the same.
   5. Both r_M and r_i will increase by 1 percentage point.

   -Select-IIIIIIIVVItem 2

   1. r_M will remain the same and r_i will decrease by 1 percentage point.
   2. Both r_M and r_i will increase by 1 percentage point.
   3. Both r_M and r_i will remain the same.
   4. Both r_M and r_i will decrease by 1 percentage point.
   5. r_M will decrease by 1 percentage point and r_i will remain the same.
3. 1. Now assume that r_RF remains at 6%, but r_M increases to 13%. The slope of the SML does not remain constant. How would these changes affect r_i? Round your answer to one decimal place.

   The new r_i will be   %.

   2. Now assume that r_RF remains at 6%, but r_M falls to 11%. The slope of the SML does not remain constant. How would these changes affect r_i? Round your answer to one decimal place.

   The new r_i will be   %.

Suppose r_RF = 6%, r_M = 10%, and b_i = 1.6.

1. What is r_i, the required rate of return on Stock i? Round your answer to one decimal place.

     %

2. 1. Now suppose r_RF increases to 7%. The slope of the SML remains constant. How would this affect r_M and r_i?
   1. r_M will remain the same and r_i will increase by 1 percentage point.
   2. r_M will increase by 1 percentage point and r_i will remain the same.
   3. Both r_M and r_i will decrease by 1 percentage point.
   4. Both r_M and r_i will remain the same.
   5. Both r_M and r_i will increase by 1 percentage point.

   Now suppose r_RF decreases to 5%. The slope of the SML remains constant. How would this affect r_M and r_i?

3. 1. Both r_M and r_i will remain the same.
   2. Both r_M and r_i will decrease by 1 percentage point.
   3. r_M will decrease by 1 percentage point and r_i will remain the same.
   4. r_M will remain the same and r_i will decrease by 1 percentage point.
   5. Both r_M and r_i will increase by 1 percentage point.

1. Now assume that r_RF remains at 6%, but r_M increases to 11%. The slope of the SML does not remain constant. How would these changes affect r_i? Round your answer to one decimal place.

The new r_i will be   %.

2. Now assume that r_RF remains at 6%, but r_M falls to 9%. The slope of the SML does not remain constant. How would these changes affect r_i? Round your answer to one decimal place.

The new r_i will be   %.

Suppose r_RF = 3%, r_M = 12%, and b_i = 1.6.

2. Now suppose r_RF decreases to 2%. The slope of the SML remains constant. How would this affect r_M and r_i?

-Select

1. What is r_i, the required rate of return on Stock i? Round your answer to one decimal place.

     %

2. 1. Now suppose r_RF increases to 4%. The slope of the SML remains constant. How would this affect r_M and r_i?
   1. Both r_M and r_i will remain the same.
   2. Both r_M and r_i will increase by 1 percentage point.
   3. r_M will remain the same and r_i will increase by 1 percentage point.
   4. r_M will increase by 1 percentage point and r_i will remain the same.
   5. Both r_M and r_i will decrease by 1 percentage point.

   -Select

   1. r_M will decrease by 1 percentage point and r_i will remain the same.
   2. r_M will remain the same and r_i will decrease by 1 percentage point.
   3. Both r_M and r_i will increase by 1 percentage point.
   4. Both r_M and r_i will remain the same.
   5. Both r_M and r_i will decrease by 1 percentage point.
3. 1. Now assume that r_RF remains at 3%, but r_M increases to 13%. The slope of the SML does not remain constant. How would these changes affect r_i? Round your answer to one decimal place.

   The new r_i will be   %.

   2. Now assume that r_RF remains at 3%, but r_M falls to 11%. The slope of the SML does not remain constant. How would these changes affect r_i? Round your answer to one decimal place.

   The new r_i will be   %.

Suppose r_RF = 4%, r_M = 10%, and b_i = 1.8.

2. Now suppose r_RF decreases to 3%. The slope of the SML remains constant. How would this affect r_M and r_i?

-Select-IIIIIIIVVItem 3

1. What is r_i, the required rate of return on Stock i? Round your answer to one decimal place.

     %

2. 1. Now suppose r_RF increases to 5%. The slope of the SML remains constant. How would this affect r_M and r_i?
   1. r_M will remain the same and r_i will increase by 1 percentage point.
   2. r_M will increase by 1 percentage point and r_i will remain the same.
   3. Both r_M and r_i will decrease by 1 percentage point.
   4. Both r_M and r_i will remain the same.
   5. Both r_M and r_i will increase by 1 percentage point.

   -Select-IIIIIIIVVItem 2

   1. r_M will decrease by 1 percentage point and r_i will remain the same.
   2. r_M will remain the same and r_i will decrease by 1 percentage point.
   3. Both r_M and r_i will increase by 1 percentage point.
   4. Both r_M and r_i will remain the same.
   5. Both r_M and r_i will decrease by 1 percentage point.
3. 1. Now assume that r_RF remains at 4%, but r_M increases to 11%. The slope of the SML does not remain constant. How would these changes affect r_i? Round your answer to one decimal place.

   The new r_i will be   %.

   2. Now assume that r_RF remains at 4%, but r_M falls to 9%. The slope of the SML does not remain constant. How would these changes affect r_i? Round your answer to one decimal place.

   The new r_i will be   %.