Based on current dividend yields and expected capital gains, the expected rates of return on portfolios Aand B are 10.1% and 15.6%, respectively. The beta of A is .6, while that of B is 1.8. 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 26% annually, while that of B is 47%, and that of the index is 36%.

Think about what are the appropriate performance measures to use in question a and b, and why.

a.	If you currently hold a market index portfolio, what would be the alpha for Portfolios A and B?(Negative value should be indicated by a minus sign. Do not round intermediate calculations. Enter your answer as a percentage rounded 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. (Enter your answer as a decimal rounded to 2 decimal places.)

	Sharpe Measure
Portfolio A
Portfolio B

b-2.

In scenario b, which portfolio would you choose?

	Portfolio A
	Portfolio B