Which investor was a better selector of individual stocks

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Two investment advisers are comparing performance. One averaged a 21% rate of return and the other a 17% rate of return. However, the beta of the first investor was 1.5, whereas that of the second investor was 1.

Problem a. Can you tell which investor was a better selector of individual stocks (aside from the issue of general movements in the market)?

Problem b. If the T-bill rate was 8% and the market return during the period was 12%, which investor would be considered the superior stock selector?

Problem c. What if the T-bill rate was 5% and the market return was 16%?

Reference no: EM132893486

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