Determine the worst stock picker

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Two investment advisors are comparing performance. Advisor A averaged a 20% return with a portfolio beta of 1.5 and adviser B averaged a 15% return with a portfolio beta of 1.2. If the T-bill rate was 5% and the market return during the period was 13%, which advisor was the worst stock picker?

A. Advisor A was better because he generated a larger alpha.

B. Advisor B was better because she generated a lower alpha.

C. Advisor A was better because he generated a higher return.

D. Advisor B was better because she achieved a good return with a lower beta.

Reference no: EM133073409

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