In Problems 2123 below, assume the risk-free rate is 8% and the expected rate of return on the

market is 18%.

Two investment advisers are comparing performance. One averaged a 19% return and

the other a 16% return. However, the beta of the first adviser was 1.5, while that of the

second was 1.

a. Can you tell which adviser was a better selector of individual stocks (aside from the

issue of general movements in the market)?

Thank you