ANSWER EACH PART PLEASE! 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 correlationcoefficients is between 0 and 1.)StockExpected ReturnStandard DeviationBetaA8.80%16% 0.8В10.70161.2C12.60161.6Fund 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.)a. What is the market risk premium (rM - TRF)? 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 16%, equal to 16%, or greater than 16%?I. Less than 16%II. Greater than 16%III. Equal to 16%V -Select-

The market risk premium is the return over risk-free return received by the investor for bearing an…

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 coefficients is between 0 and 1.) Stock Expected Return Standard Deviation Beta 8.80% 16% 0.8 10.70 16 1.2 C 12.60 16 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 r a. What is the market risk premium (M - TRF)? 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 16%, equal to 16%, or greater than 16%? I. Less than 16%

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 coefficients is between 0 and 1.) Stock Expected Return Standard Deviation Beta 8.80% 16% 0.8 10.70 16 1.2 C 12.60 16 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 r a. What is the market risk premium (M - TRF)? 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 16%, equal to 16%, or greater than 16%? I. Less than 16%

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter8: Analysis Of Risk And Return

Section: Chapter Questions

Problem 12P

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