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Problem Walk$-$Through

$\backslash$table$[[$Stock$,$Expected Return,Standard Deviation,Beta$],[$A$,6\mathrm{.}95\%,16\%,0\mathrm{.}7],[$B$,9\mathrm{.}05,16,1\mathrm{.}3],[$C$,10\mathrm{.}10,16,1\mathrm{.}6]]$

Fund $P$ has one$-$third of its funds invested in each of the three stocks. The risk$-$free rate is $4\mathrm{.}5\%,$ and the market is in equilibrium. $($That is$,$ required returns equal expected returns.$)$

a$.$ What is the market risk premium $(r_M-r_{RF})?$ Round your answer to one decimal place. $\%$

b$.$ What is the beta of Fund P$?$ Do not round intermediate calculations. Round your answer to two decimal places.

c$.$ What is the required return of Fund P$?$ Do not round intermediate calculations. Round your answer to two decimal places. $\%$

d$.$ What would you expect the standard deviation of Fund $P$ to be$?$

I. Less than $16\%$

II$.$ Greater than $16\%$

III. Equal to $16\%$