Quick equity question

burning0spear

Assuming all other factors remain unchanged, which of the following would most likely lead to a decrease in the market P/E ratio?
1. A decline in the riskfree rate.
2. A decline in the rate of inflation.
3. A rise in the stock risk premium.
4. An increase in the dividend payout ratio
I chose 1 reason being, if you decrease RF using CAPM to derive K, K turns out to be higher keeping all else equal?
.07 * 1.2(.10  .07) = 10.6
.05 * 1.2(.11  .05) = 11
Higher K Higher spread under demoninator –lower PE?
What am I missing here?