Question
You are an analyst for a large public pension fund and you have been assigned the task of evaluating two different external portfolio managers (Y
You are an analyst for a large public pension fund and you have been assigned the task of evaluating two different external portfolio managers (Y and Z). You consider the following historical average return, standard deviation, and CAPM beta estimates for these two managers over the past five years:
Additionally, your estimate for the risk premium for the market portfolio is 4.00 percent and the risk-free rate is currently 5.00 percent.
Manager Y: % Manager Z: %
Manager Y: % Manager Z: % Choose the correct SML graph.
correct graph is -Select-graph Agraph Bgraph Cgraph DItem 5 .
-Select-Manager YManager ZItem 6 outperformed the -Select-manager Ymanager ZItem 7 on a risk-adjusted basis.
Manager Y -Select-outperformed/underperformed market expectations in general. Manager Z -Select-outperformed/underperformed market expectations in general.
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