CAPM, PORTFOLIO RISK, AND RETURN: Consider the following information for stocks A, B, and C. The returns on the three stocks are positively co-related, but they are not perfectly co-related i.e., each of the coefficients correlation is between 0 and 1.

STOCKS: EXPECTED RETURNS % STANDARD DEVIATION % BETA

A 9.55 15 0.9

B 10.45 15 1.1

C 12.70 15 1.6

Fund P has one-third of its funds invested in each of the three stocks. The risk-free factors rate is 5.5%, and the market is in equilibrium.

Question: What is the Market Risk Premium r^PM and the required return of Fund P. Hence, also find out (calculate) the required return of Fund P simultaneously. Lastly, make a decision regarding the expected standard deviation of Fund P to be less than 15%, equals to greater?? explain wisely within 7 minutes of the time limit frame.