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Compute the alpha for fund

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The mean returns, standard deviations, and betas for three funds and the market are given below: 

                           Mean return             Std. deviation      Beta 

Fund  A                     15%                    40%                       1.1 

Fund  B                    12.5%                   25%                      1.0 

Fund  C                    14%                      30%                     1.3 

Market                     12%                      15%                       1.0 

The risk-free rate of return is 3%. Assume that the CAPM holds. 

a) Compute the alpha for each fund. 

b) Compute the Information (Appraisal) ratio for each fund. 

Reference no: EM133113098

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