The Alpha fund has a beta of 1.25and earned a 17.5% return over a period in which the market portfolio earned 15% and the risk-free rate was 5%.

c.) Suppose that the Alpha funds return has an annual standard deviation of 0.35 and the market portfolios return also has annual standard deviation of 0.25.Decompose the portfolio's return due to selectivity into its return due to net selectivity and its return due to lack of diversification.

d.) Suppose that portfolio A has a target beta of 1. Decompose the portfolio's return due to risk into its return due to target risk and its return due to the manager's choice of risk.

e.) Based on your assessment of the managers contributions to the Alpha Funds performance should the manager be given a raise or fired?