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Which fund manager was the better stock picker

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Question - You are trying to make decisions on which mutual fund you should invest in based on the past performance of two fund managers. Manger A averaged a 17% return with a portfolio beta of 1.5, and manager 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 fund manager was the better stock picker?

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

B. Advisor B was better because she generated a larger 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: EM132911549

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