ome Ch 08- RR (Homework- from EOC problmes) ses og and Study Tools al Options ege Success Tips eer Success Tips ENDED FOR YOU eBook Problem Walk-Through Q Search this course ? 0 X Consider the following information for 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.) Stock Expected Return Standard Deviation Beta A 7.25% 16% 0.7 B C 8.75 9.75 16 1.3 16 1.7 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.) a. What is the market risk premium (TM - TRF)? Round your answer to one decimal place. % b. What is the beta of Fund P? Do not round intermediate calculations. Round your answer to two decimal places. Answer Matching ons c. What is the required return of Fund P? Do not round intermediate calculations. Round your answer to two decimal places. % Help Give Feedback d. What would you expect the standard deviation of Fund P to be? I. Less than 16% II. Greater than 16% III. Equal to 16% -Select- N A-Z