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Two investment advisers are comparing performance. One averaged a 18% rate of return and the other a 16% rate of return. However, the beta of
Two investment advisers are comparing performance. One averaged a 18% rate of return and the other a 16% rate of return. However, the beta of the first investor was 1.4, whereas that of the second investor was 1. a. Can you tell which investor was a better selector of individual stocks (aside from the issue of general movements in the market)? Second investor Cannot determine First investor b. If the T-bill rate was 5% and the market return during the period was 13%, which investor would be considered the superior stock selector? First investor Cannot determine Second investor c. What if the T-bill rate was 2% and the market return was 14% ? Second investor First investor Cannot determine
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