What is the beta for a portfolio with an expected return of $12\mathrm{.}5\%?$

a$)$

b$)$

c$)$

d$)2\mathrm{.}5$

Two investment advisers are comparing performance. Adviser A averaged a $20\%$

return with a portfolio beta of $1\mathrm{.}5,$ and adviser B averaged a $15\%$ return with a

portfolio beta of $1\mathrm{.}2.$ If the T$-$bill rate was $5\%$ and the market return during the period

was $13\%,$ which adviser was the better stock picker?

a$)$ Advisor A was better because he generated a larger alpha.

b$)$ Advisor B was better because she generated a larger alpha.

c$)$ Advisor A was better because he generated a higher return.

d$)$ Advisor B was better because she achieved a good return with a lower beta.

An investor takes as large a position as possible when an equilibrium price

relationship is violated. This is an example of:

a$)$ A dominance argument.

b$)$ The mean$-$variance efficient frontier.

c$)$ Arbitrage activity.

d$)$ The capital asset pricing model.