Consider the two (excess return) index-model regression results for stocks A and B. The risk-free rate over the period was 4%, and the markets average return was 12%. Performance is measured using an index model regression on excess returns.

	Stock A	Stock B
Index model regression estimates	1% + 1.2(rM rf)	2% + 0.8(rM rf)
R-square	0.689	0.493
Residual standard deviation, (e)	12.2%	21%
Standard deviation of excess returns	23.5%	28.7%

a. Calculate the following statistics for each stock: (Round your answers to 4 decimal places. Answer must be in percentages)

	Stock A	Stock B
Alpha
Information Ratio
Sharpe Ratio
Treynor Measure

b. Which stock is the best choice under the following circumstances?

This is the only risky asset to be held by the investor	Stock A or Stock B
This stock will be mixed with the rest of the investor's portfolio, currently composed solely of holdings in the market-index fund	Stock A or Stock B
This is one of the many stocks that the investor is analyzing to form an actively managed stock portfolio	Stock A or Stock B