Question
You are trying to make decisions on which mutual fund you should invest in based on the past performance of two fund managers. Manger A
You are trying to make decisions on which mutual fund you should invest in based on the past performance of two fund managers. Manger A averaged a 17% return with a portfolio beta of 1.5, and manager B averaged a 15% return with a portfolio beta of 1.2. If the T-bill rate was 5% and the market return during the period was 13%, which fund manager 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.
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