Short Question $($SQ$2)$

$(15\%)$

The market index model can be formulated as:

$R_t^e=+R_{M,t}^e+lo{n}_t,$

where $R_t^e$ denote the annual excess returns of the risky asset and,$R_{M,t}^e$ is the excess annual return on the market index, S&P $500.$ There are two risky funds, A and B$,$ and their returns follow the above market index model. The estimations of annual means, annual standard deviations, and the parameters of the index model for Funds A and B and the S&P $500$ index are in the table below.

$\backslash$table$[[$Assets$,$Risk premium,$\backslash$table$[[$Standard deviation of$],[$returns$]],$Market beta $()$