IV. Performance Measurement II Consider a portfolio (P) with the following characteristics (which were measured over a certain time- period T): mean or expected annual return (up) = 10%, standard deviation of annual portfolio returns (op) = 15%, and a beta relative to the market (Bp) = 0.60. During the same time-period T, the market index (M) had the following characteristics: mean or expected annual return (um) = 15% and the standard deviation of annual market returns (om) = 20%. For simplicity, assume that the risk-free asset has an annual return of 2%. Consider an investor who uses the following combination of total and systematic risks to assess the riskiness of a portfolio: Portfolio Risk = Op - 5Bp. 1. Compared to the market, would the investor perceive portfolio P as being better or worse? Please explain briefly. 2. Compute the performance differential between P and M in economic terms (i.e., in terms of percentage returns). 3. Explain (2-3 lines) what this performance differential means