Excel Online Structured Activity: CAPM, portfolio risk, and return Consider the following information for three stocks, 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 8.43 % 14 % 0.7 B 10.39 14 1.1 12.84 14 1.6 Fund P has one-third of its funds invested in each of the three stocks. The risk-free rate is 5%, and the market is in equilibrium. (That is, required returns equal expected returns.) The data has been collected in the Microsoft Excel Online file below. Open the spreadsheet and perform the required analysis to answer the questions below. IX X Open spreadsheet a. What is the market risk premium (M - PRF)? Round your answer to two decimal places. % b. What is the beta of Fund P? Do not round intermediate calculations. Round your answer to two decimal places. MI MARINE (That is, required returns equal expected returns.) The data has been collected in the Microsoft Excel Online file below. Open th spreadsheet and perform the required analysis to answer the questions below. X Open spreadsheet a. What is the market risk premium (CM. TRE)? Round your answer to two decimal places. % 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. Would you expect the standard deviation of Fund P to be less than 14%, equal to 14%, or greater than 14%? 1. less than 14% II. greater than 14% III. equal to 14% Check My Work Reset Problem x Excel template Saved File Home Insert Formulas Data Review View Help Anal Tell me what you want to do Editing y Percentage 10 v B .. B10 fo D E F G H 1 5.00% CAPM, portfolio risk, and 1 return 2 3 Risk-Free Rate, RF 4 5 6 Expected Return 7 Standard Deviation 8 9 10 Market Risk Premium, RPM Formula Formula Stock A 8.43% 14.00% 0.70 Formula Stock B 10.39% 14.00% 1.10 Beta Stock C 12.84% 14.00% 1.60 #N/A NN/A #N/A 0.333333 0.333333 0.333333 WNA WNIA 12 % Stock in Fund P 13 14 Beta of Fund P 15 16 Required Return of Fund P 17 18 Expected Return of Fund P 19 20 21 22 23 24 25 WNIA 27 28 29