2. Consider the following performance history of Stable Value mutual fund relative to the market.

Stable Value Fund

Date Fund Mkt

1 11% 2%

2 3% 3%

3 4% 6%

4 -1% 0%

The risk-free rate is 2%.

1. Did Stable Value outperform the market? By how much?
2. Please compare the Sharpe Ratio of Stable Value to that of the market portfolio. Which is a better investment based on the Sharpe Ratio analysis?