Question
Two investment advisers are comparing performance. One averaged a 19% rate of return and the other...
Two investment advisers are comparing performance. One averaged
a 19% rate of return and the other a 16.5% rate of return. However,
the beta of the first investor was 1.3, whereas that of the second
investor was 1.
a. Can you tell which investor was a better
selector of individual stocks (aside from the issue of general
movements in the market)?
a. First investor
b. Second investor
c. Cannot determine
b. If the T-bill rate was 6% and the market return
during the period was 10%, which investor would be considered the
superior stock selector?
a. First investor
b. Second investor
c. Cannot determine
c. What if the T-bill rate was 3% and the market
return was 16%?
a. Second investor
b. Cannot determine
c. First investor
Homework Answers
Answer #1
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