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 13%. 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	0.695	0.496
Residual standard deviation, (e)	12.3%	21.1%
Standard deviation of excess returns	23.6%	28.9%

a. Calculate the following statistics for each stock: (Round your answers to 4 decimal places.)

Stock A Stock B

I. Alpha % %

ii. Information ratio % %

iii. Sharpe ratio % %

iv. Treynor measure % %

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