Consider the following historic information on the market, the risk-free rate (T-Bills) and two mutual fundsm Templeton and Fidelity.

a. Compute the Treynor Indexes for each fund.
b. Compare each fund's return to that predicted by the CAPM (SML).
a. The Treynor Index for the Temploton Fund is %.
The Treynor Index for the Fidelity Fund is %.
b. The Templeton Fund underperformed its predicted return from the CAPM by %.
The Fidelity Fund underperformed its predicted return from the CAPM by %.
Which was the better performing fund compared to the SML?
a. Templeton
b. Fidelity

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Market Templeton 10.77% 1.30 T-Bills Fidelity Average Return 5.59% 9.68% 1.70% 1 Beta 0.50