Answer Happy

tes Consider the following information for three stocks, Stocks A, B, and C. The returns on the three stocks are positively correlated, but they are not perfectly correlated. (That is, each of the correlation coefficients is between 0 and 1.) Expected Return A 8.24% B 9.86 C 11.48 Stock Standard Deviation 15% 15. 15 Beta 0.8 1.2 1.6 Fund P has one-third of its funds invested in each of the three stocks. The risk-free rate is 5%, and the market is in equilibrium. (That is, required returns equal expected returns.) The data has been collected in the Microsoft Excel Online file below. 0

Question 1 1. What is the market risk premium (TM-TRF)? Do not round intermediate calculations. Round your answer to two decimal places. Note: Only numbers are allowed in the field. Special symbols are not allowed. For example, if your calculated result is 1.23%, just enter 1.23. Question 2 1 pts 2. What is the beta of Fund P? Do not round intermediate calculations. Round your answer to two decimal places. 1 pts

Question 3 3. What is the required return of Fund P? Do not round intermediate calculations. Round your answer to two decimal places. Note: Only numbers are allowed in the field. Special symbols are not allowed. For example, if your calculated result is 1.23%, just enter 1.23. Question 4 4. Would you expect the standard deviation of Fund P to be less than 15%, equal to 15 % , or greater than 15%? less than 15% greater than 15% 1 pts O equal to 15% 1 pts