Q#3. An analyst is reviewing various asset alternatives and provided with the following information directly pertaining to the broad equity market in U.S. and various industries within the U.S. market that are of particular investment interest. Expected risk premium for overall global investable market (GIM) portfolio 5.0% Expected standard deviation for the GIM portfolio 9.0% Expected Std. Dev. For U.S. biotech industry equity investments 13.0% Expected Std. Dev. For U.S. auto industry equity investments 7.0% Expected Std. Dev. For U.S. consumer products industry equity investments 6.5% Assume that the U.S. market is 80% integrated with world markets. Assume that Sharpe Ratio for the world market is 0.3 The U.S. biotech industry has a correlation of 0.6 with the GIM portfolio The U.S. auto industry has a correlation of 0.7 with the GIM portfolio The U.S. Consumer Products industry has correlation of 0.8 with the GIM portfolio A. Basing your answers only on the data presented in the table above and using the international capital asset pricing model in particular, the Singer-Tehrar approach estimate the expected risk premium for the following: a. U.S. biotech industry b. U.S. auto industry c. U.S. consumer products industry B. Judge which industry is attractive from valuation perspective. Explain.