5 - Suppose that you are managing three security portfolio funds. The risk-free rate, average returns, standard deviations, and betas for three funds and the S&P 500 are given below.

Fund	Average Return	Standard Deviation	Beta
A	15%	20%	0.8
B	20%	30%	1.2
S&P 500 Index	12%	18%
Risk-free Asset	3%

(1) Compute the standard deviation of each funds diversifiable risk (e).

(2) Compute the information ratio (IR) of each fund. Based on the IR measure, determine which fund performed the best risk-adjusted return.