Two investment advisers are comparing performance. One averaged a 19% rate of return and the other a 16% rate of return. However, the beta of the first investor was 1.5, whereas that of the second investor was 1.a. Can you tell which investor was a better selector of individual stocks (aside from the issue of general movements in the market)?b. If the T-bill rate was 6% and the market return during the period was 14%, which investor would be considered the superior stock selector?c. What if the T-bill rate was 3% and the market return was 15%?
Two investment advisers are comparing performance. One averaged a 19% rate of return and the other a 16% rate of return. However, the beta of the first investor was 1.5, whereas that of the second investor was 1.a. Can you tell which investor was a better selector of individual stocks (aside from the issue of general movements in the market)?b. If the T-bill rate was 6% and the market return during the period was 14%, which investor would be considered the superior stock selector?c. What if the T-bill rate was 3% and the market return was 15%?
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Two investment advisers are comparing performance. One averaged a 19%
a. Can you tell which investor was a better selector of individual stocks (aside from the issue of general movements in the market)?
b. If the T-bill rate was 6% and the market return during the period was 14%, which investor would be considered the superior stock selector?
c. What if the T-bill rate was 3% and the market return was 15%?
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