Based on current dividend yields and expected capital gains, the expected rates of return on portfoliosAandBare 11% and 14%, respectively. The beta ofAis .8, while that ofBis 1.5. The T-bill rate is currently 6%, while the expected rate of return of the S&P 500 index is 12%. The standard deviation of portfolioAis 10% annually, while that ofBis 31%, and that of the index is 20%.

a.If you currently hold a market index portfolio, what would be the alpha for PortfoliosAandB?(Negative values should be indicated by a minus sign. Do not round intermediate calculations. Round your answers to 1 decimal place.)

Alpha

PortfolioA %

PortfolioB %

b-1.If instead you could investonlyin bills andoneof these portfolios, calculate the sharpe measure for PortfoliosAandB.(Round your answers to 2 decimal places.)

Sharpe Measure

PortfolioA

PortfolioB