You currently hold a portfolio that has SPY ETF in it (SPY is an Exchange traded Fund that follows S&P 500 performance and therefore approximates the Market). You are considering adding ORCL stock to it. Table below summarizes historical data analysis of the SPY, ORCL, and portfolio of SPY + ORCL performance. It also has regression analysis summary information.

Use this table to answer all the questions:

1. Did you get consistent performance results from the two risk measures, Treynor and Sharpe, and why? A. Yes, both measure Return for the risk taken and give consistent performance ranking results B. Yes, good performance is a good performance no matter what C. No, results are not consistent because Treynor Index measure was developed later than Sharpe Ratio measure D. No, results are not consistent because Treynor and Sharpe use different types of risk measures for evaluation 2 .Calculate Jehnsen Alpha for ORCL and SPY+ORCL

A. .122% and 0.12% B. .13% and .08% C. 12% and 13.8% D. .058% and .010%

3. Calculate M² for ORCL and SPY+ORCL

A.-.004 and .006 B. .1204 and .1379 C. .0543 and .0625 D. .058 and .010

4. Calculate Information Ratio for ORCL

A. -.004 B. .058 C. .0543 D. .122

5. Should ORCL be added to the portfolio of SPY shares and why?

A. Yes, Information Ration is positive B. Yes, Sharpe Ratio of SPY+ORCL improves C. Yes, Treynor Index of SPY+ORCL improves D. Yes, SPY+ORCL has positive Jehnsen Alpha E. All of the above F. No, M² for ORCL is negative G. No, Sharpe ratio of ORCL is less than that of the market

SPY 0.12% Average Variance 0.00003 0.55% St. Dev Intercept 1 Beta Var (residuals) St. Dev. (residuals) Rf 0.05% R (CAPM) Jensen Alpha Treynor Index 0.0007 Sharpe Ratio 0.1273 Information Ratio Sharpe Ratio ORCL. 0.18% 0.000117 1.08% 0.0005 1.032 0.000084 0.92% 0.0013 0.1204 SPY Portfolio ORCL 0.13% 0.000034 0.58% 0.0001 1.006 0.000002 0.16% 0.0008 0.1379