P13.13 During the year just ended, Anna’s portfolio, which has a beta of 0.90, earned a return of 8.6%. The risk-free rate is currently 7.3%, and the return on the market portfolio during the year just ended was 9.2%.

a. Calculate Treynor’s measure for Anna’s portfolio for the year just ended.

b. Compare the performance of Anna’s portfolio found in part a to that of Stacey’s portfolio, which has a Treynor’s measure of 1.25%. Which portfolio performed better?

Explain.

c. Calculate Treynor’s measure for the market portfolio for the year just ended.

d. Use your findings in parts a and c to discuss the performance of Anna’s portfolio relative to the market during the year just ended.