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:

Portfolio Actual Avg. Return Standard Deviation Beta

Manager Y $9\mathrm{.}70\%13\mathrm{.}10\%1\mathrm{.}30$

Manager Z $8\mathrm{.}90\%9\mathrm{.}90\%0\mathrm{.}80$

Additionally, your estimate for the risk premium for the market portfolio is $5\mathrm{.}00$ percent and the risk$-$free rate is currently $3\mathrm{.}50$ percent.

For both Manager Y and Manager Z$,$ calculate the expected return using the CAPM. Round your answers to two decimal places.

Manager Y:

$\%$

Manager Z:

$\%$

Calculate each fund manager$$s average $$alpha$($i$.$e$.,$ actual return minus expected return$)$ over the five$-$year holding period. Round your answers to two decimal places.

Manager Y:

$\%$

Manager Z:

$\%$

Choose the correct SML graph.

The correct graph is

$-$Select$-$

$.$

A$.$

B$.$

C$.$

D$.$

Explain whether you can conclude from the information in Part b if:

either manager outperformed the other on a risk$-$adjusted basis.

$-$Select$-$

outperformed the

$-$Select$-$

on a risk$-$adjusted basis.

either manager outperformed market expectations in general.

Manager Y

$-$Select$-$

market expectations in general.

Manager Z

$-$Select$-$

market expectations in general.