Multiple Choice
Two investment advisors are comparing performance. Advisor A averaged a 20% return with a portfolio beta of 1.5 and Advisor B averaged a 15% return with a portfolio beta of 1.2. If the T-bond rate was 5% and the market return during the period was 13%, which advisor was the better share picker?
A) Advisor A was better because he generated a larger alpha
B) Advisor B was better because he generated a larger alpha
C) Advisor A was better because he generated a higher return
D) Advisor B was better because he achieved a good return with a lower beta
Correct Answer:
Verified
Correct Answer:
Verified
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