Question
As an analyst at Valuation Service Inc, you are comparing the performances of two investors. Investor A averaged a 20% rate of return and Investor
As an analyst at Valuation Service Inc, you are comparing the performances of two investors. Investor A averaged a 20% rate of return and Investor B had a 15% rate of return. The beta of Investor A was 1.9, whereas that of the other was 1.1. If the T-bill rate was 5% and the market return during the period was 13%. Please choose all correct answers. Please also note that each incorrect answer will reduce the score by 10%.
a. The required returns for investor B is 13.8%
b. Investor B is better than Investor A because Investor B has a higher alpha than Investor A
c. The required returns for investor A is 20.2%
d. The required returns for investor B is 9.20%
e. Investor A is better than Investor B because Investor A has a higher alpha than Investor B.
f. The required returns for investor A is 15.60%
g. Investor B is better than Investor A because Investor A has a higher alpha than Investor B.
h. The required returns for investor A is 11.5%
i. The required returns for investor B is 15.60%
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