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You want to evaluate three mutual funds using the information ratio measure for performance evaluation. The...

You want to evaluate three mutual funds using the information ratio measure for performance evaluation. The risk-free return during the sample period is 6%, and the average return on the market portfolio is 19%. The average returns, residual standard deviations, and betas for the three funds are given below.

Average Return Residual Standard Deviation Beta
Fund A 20 % 4.00 % 0.8
Fund B 21 % 1.25 % 1.0
Fund C 23 % 1.20 % 1.2

The fund with the highest information ratio measure is

Funds A and B (tied for highest).

Fund B.

Fund C.

Fund A.

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