Based on current dividend yields and expected capital gains, the expected rates of return on portfolios A and B are 11% and 14%, respectively. The beta of A is .8, while that of B is 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 portfolio A is 10% annually, while that of B is 31%, and that of the index is 20%.

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

	Alpha
Portfolio A	%
Portfolio B	%

b-1.	If instead you could invest only in bills and one of these portfolios, calculate the sharpe measure for Portfolios A and B. (Round your answers to 2 decimal places.)

	Sharpe Measure
Portfolio A
Portfolio B

b-2.

Which portfolio would you choose?

	Portfolio A
	Portfolio B