3. Answer the following unrelated questions (&b) regarding risk and return; a. Based on the following data, compute the Beta for Zebra Corp.: Month Market Return(%) Zebra Corp Retum(%) 2.0 1.6 2 2.0 2.0 2.0 5.4 -2.0 -5.4 -2.0 -1.6 6 -2.0 -2.0 UAWN b. The CAPM (Capital Asset Pricing Model) is often used to evaluate the performance of professional money management Suppose that Fraudulent Mutual Fund has a 12-year average annual return of 20%, with a beta of 22. The S&P 500 (market) index grew 14% per year over the same period, and the average Treasury Bill (risk-free) yield was 4%. The manager of the fund daims that the reason to buy his fund is that it has beaten the market by a margin of 6% per year. Evaluate the manager's claim, and should buy the fund? (Hint: Do you believe that the mutual fund has outperformed the market if the CAPM is valid to represent the risk-return relationship. i.e. what return would you expect from this fund given its level of riskiness?)