3. (15 pts) (a) (10 points) You are given the information that stock A has a beta of 0.5 and investors expect it to return 9%. Stock B has a beta of 2 and investors expect it to return 16%. Use the CAPM to find the market risk premium, the rate of return on risk-free assets, and the expected rate of return on the market. (b) (5 points) A mutual fund manager claims to have a great deal for you. He claims that his portfolio has a beta of only 0.8 and earns an expected rate of return of 11%. If the rate of return available on risk-free assets is 4% and you expect the rate of return on the market portfolio to be 14%, should you invest in this manager's mutual fund? Why? 3. (15 pts) (a) (10 points) You are given the information that stock A has a beta of 0.5 and investors expect it to return 9%. Stock B has a beta of 2 and investors expect it to return 16%. Use the CAPM to find the market risk premium, the rate of return on risk-free assets, and the expected rate of return on the market. (b) (5 points) A mutual fund manager claims to have a great deal for you. He claims that his portfolio has a beta of only 0.8 and earns an expected rate of return of 11%. If the rate of return available on risk-free assets is 4% and you expect the rate of return on the market portfolio to be 14%, should you invest in this manager's mutual fund? Why