An analyst wants to evaluate Portfolio X, consisting entirely of U.S. common stocks, using both the Treynor and Sharpe measures of portfolio performance. The following table provides the average annual rate of return for Portfolio X, the market portfolio (as measured by the Standard and Poor's 500 Index), and U.S. Treasury bills (T-bills) during the past eight years.

a. Calculate both the Treynor measure and the Sharpe measure for both Portfolio X and the S&P 500. Briefly explain whether Portfolio X underperformed, equaled, or outperformed the S&P 500 on a risk-adjusted basis using both the Treynor measure and the Sharpe measure.
b. Based on the performance of Portfolio X relative to the S&P 500 calculated in Part a, briefly explain the reason for the conflicting results when using the Treynor measure versus the Sharpemeasure.

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Annual Averag Rate of Return 10% 12 6 eStandard Deviation Beta 0.60 1.00 n/a of Return Portfolio X S&P 500 T-bills n/a- not applicable 18% 13 n/a