The interest rate during the period is 3%. The mean return and standard deviation of the market portfolio M is 7% and 18%, respectively.

a) Calculate the performance measures for portfolio A and portfolio B: Sharpe ratio, Jensens alpha, and Treynor measure.

b) Is portfolio A or portfolio B a better choice if it will be used to represent the entire investment fund? Explain your argument.

\begin{tabular}{c|c|c} & Portfolio A & Market portfolio B \\ \hline Mean return & 9% & 8% \\ \hline Beta & 1.25 & 1.00 \\ \hline Standard deviation & 22% & 20% \end{tabular}