Two Investment Advisors Are Comparing Performance

question 75

Multiple Choice

Two investment advisors are comparing performance.Advisor A averaged a 20% return with a portfolio beta of 1.5 and Advisor B averaged a 15% return with a portfolio beta of 1.2.If the T-bill rate was 5% and the market return during the period was 13%,which advisor was the better stock picker?

• A) Advisor A was better because he generated a larger alpha
• B) Advisor B was better because he generated a larger alpha
• C) Advisor A was better because he generated a higher return
• D) Advisor B was better because he achieved a good return with a lower beta

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Definitions:

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An individual's sense of belonging and identification with a particular religion, which shapes their beliefs, practices, and community interactions.