Consider the following information for Stock A, B, and C. The returns on the three stocks are positively correlated, but they are not perfectly correlated. Fund P has one-third of its funds invested in each of the three stocks. The risk-free rate is 5.5%, and the market is in equilibrium. (That is, required returns equal expected returns.)

STOCK expected return standard deviation beta

a 9.55% 15% .9

b 10.45% 15% 1.1

c 12.7% 15% 1.6

a. what is the market risk premium

b. what is beta of fund p

c.what is the required return of fund p