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Use the information for this question and the following two questions ( Q 3 3 - 3 5 ) : Consider the following information for
Use the information for this question and the following two questions Q:
Consider the following information for Stocks X Y and Z The returns on the three stocks are positively correlated, but they are not perfectly correlated. That is each of the correlation coefficients is between and
Fund Q has onethird of its funds invested in each of the three stocks. The riskfree rate is and the market is in equilibrium.
Stock
Expected Return
Beta
X
Y
Z
Q
What is the market risk premium?
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