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Consider the following performance history of Stable Value mutual fund relative to the market. Stable Value Fund Date Mkt 1 11% 2% 2 3% 3%

  1. Consider the following performance history of Stable Value mutual fund relative to the market.

Stable Value Fund

Date

Mkt

1

11%

2%

2

3%

3%

3

4%

6%

4

-1%

0%

The risk free rate is 2%.

Question1: What is the t-statistic of the alpha? Is the alpha statistically different from zero?

Question2: Would you like to add some investment in the Stable Value fund to your market portfolio?

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