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You are a financial advisor and your customer asks you to compare the performance of the following two mutual funds A and B, based on
You are a financial advisor and your customer asks you to compare the performance of the following two mutual funds A and B, based on the CAPM. Fund A achieved an average return of 8% with market beta 0.5, whereas fund B attained an average return of 15%. The risk-free rate is 2% and the return of the market portfolio is 8%. a. What is the condition that must hold in order to conclude that fund A has been a superior stock selector compared to fund B? Give the theoretical answer and show also all the related computations
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