E eBook Problem Walk Through 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 9.45% 0.9 11.10 14 1.2 12.75 14 Fund has one-third of its funds invested in each of the three stocks. The risk-free rate is 4.5%, and the market is in equilibrium. That is required returns equat expected returns a. What is the market risk premium (s) Round your answer to one decimal place 6 1 b. What is the beta of Fund 2 Do not round intermediate calculations, Round your answer to two decimal place What is the required return of Fund D Do not round Intermediate calculations. Round your answer to two decimal places E d. What would you expect the standard deviation of Fund to be? 1. Less than 14 11. Greater than 145 til Equal to 14 Scontinue eBook Problem Walk-Through Suppose you are the money manager of a $3.44 million investment fund. The fund consists of four stocks with the following investments and betas Stock Investment Beta A $ 420,000 1.50 B 300,000 (0.50) c 1,020,000 ibs D 1,700,000 0.75 If the market's required rate of return is 10% and the risk-free rate is 49, what is the fund's required rate of retum7 Do not found intermediate calculation. Round your answer to two dedmal places A stock has a required return of 11%, the risk-free rate is 6.5%, and the market RDIL a. What is the stock's beta? Round your answer to two decimal places. b. If the market risk premium increased to 6%, what would happen to the stock's required rate of return? Assume that the risk-free rate and the beta remain unchanged. Do not round intermediate calculations, Round your answer to two decimal places. 1. If the stocks beta is greater than 1,0, then the change in required rate of return will be less than the change in the market risk premium 11. If the stocks beta is equal to 1.0, then the change in required rate of return will be greater than the chanpe in the market risk premium. III. If the stock's beta is equal to 1.0, then the change in required rate of return will be less than the change in the market risk premium IV. it the stocks beta in greater than 1,0, then the change in required rate of return will be greater than the change in the market risk premium V. If the stock's beta is less than 10, then the change in required rate of return will be greater than the change in the market risk premium. Stocks required rate of return will be