Assuming the Three factors model is correct. Which of the following are true?   a   A portfolio that held growth stocks from 1960-2000 can earn a positive CAPM alpha b   A portfolio that held small stocks from 1960-2000 can earn a positive CAPM alpha c   A portfolio manager than generated a 5% CAPM alpha must be a skillful one d   Growth stocks must have higher market beta than value stocks

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A: ParticularsStock AStock BBeta1.201.50R-square0.250.15σM16%Weight0.700.30

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A: beta coefficient measures the volatality of stock with respect to market.

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A: StockExpected ReturnStandard DeviationA8%55%B4%45%Correlation -1

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A: Formulas:

Portfolio Management

Portfolio management is the process by which an investor decides that how the person will invest in a variety of assets in order to get a desired return in the future. A portfolio means a pool of assets that includes securities, bonds, and other investment instruments which helps in risk minimization of the money that has been invested. In other words, it can be said that a portfolio means a combination of assets in which an investor decides to invest their money in order to get a lump sum return in the future or even a series of cash flow that the person is expecting at the end of their job life.