Consider the following information for stocks A , B , and C . The returns on the
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Question:
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 and
Stock Expected Return Standard Deviation Beta
A
B
C
Fund P has onethird of its funds invested in each of the three stocks. The riskfree rate is and the market is in equilibrium. That is required returns equal expected returns.
What is the market risk premium rM rRF Round your answer to one decimal place.
What is the beta of Fund P Do not round intermediate calculations. Round your answer to two decimal places.
What is the required return of Fund P Do not round intermediate calculations. Round your answer to two decimal places.
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