Excel Online Structured Activity: CAPM, portfolio risk, and returnConsider 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.)StockExpected ReturnStandard DeviationBetaA8.5814%14%0.7B10.341414 1.1C12.541414 1.6Fund P has one-third of its funds invested in each of the three stocks. The risk-free rate is 5.5%, 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 What is the market risk premium (rM - rRF)? Round your answer to two decimal places._________%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.___________Would you expect the standard deviation of Fund P to be less than 14%, equal to 14%, or greater than 14%? less than 14%greater than 14%equal to 14% FormulasDataReviewViewHelpO Editing vB B A ..Arial10E MergePercentage910C.KCAPM, portfolio risk, andretum2.3 Risk-Free Rate, RF4.5 50%Slock AFormulaStock BFormulaStock CFormula6 Expected Rebum1 Standard DeviationBeta8 58%14.00%10 34%12 54%14.00%14 00%0.701.101.600 Market Risk Promium, RPMN/AN A2NA11222 Stock in Fund P0 3333330 3333330 3333334 Beta of Fund P#N/A6 Requred Return of Fund PN/AAExpected Rotum of Fund PEN/AINE A Sheet1akuston Mode AutomatiWorkbook Statistics• 20220507 214903jpgO20220507 214812 jpg

(a) Computation of the market risk premium.We have, Accounting to CAPM model.We have, Expected…

Answered: Consider the following information for…

MATLAB: An Introduction with Applications

6th Edition

ISBN:9781119256830

Author:Amos Gilat

Publisher:Amos Gilat

Chapter1: Starting With Matlab

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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
A	8.58	14%	14	%	0.7
B	10.34	14	14		1.1
C	12.54	14	14		1.6

Fund P has one-third of its funds invested in each of the three stocks. The risk-free rate is 5.5%, 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

What is the market risk premium (r_M - r_RF)? Round your answer to two decimal places.

_________%
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.

___________
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%
2. greater than 14%
3. equal to 14%