$8-13$ CAPM, PORTFOLIO RISK, AND RETURN Consider the following information for three

stocks, 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 $0$ and $1.)$

Fund $Q$ has one$-$third of its funds invested in each of the three stocks. The risk$-$free rate is

$5\mathrm{.}5\%,$ and the market is in equilibrium. $($That is$,$ required returns equal expected returns.$)$

a$.$ What is the market risk premium $(\{$:$r_M-r_{RF})?$

b$.$ What is the beta of Fund $Q?$

c$.$ What is the expected return of Fund Q$?$

d$.$ Would you expect the standard deviation of Fund $Q$ to be less than $15\%,$ equal to $15\%,$

or greater than $15\%?$ Explain.