Chee Chew's portfolio has a beta of 1.3 and earned a return of 12.9% during the year

Question:

Chee Chew's portfolio has a beta of 1.3 and earned a return of 12.9% during the year just ended. The risk-free rate is currently 4.2%. The return on the market portfolio during the year just ended was 11.0%.

a. Calculate Jensen's measure ( Jensen's alpha) for Chee's portfolio for the year just ended.

b. Compare the performance of Chee's portfolio found in part a to that of Carri Uhl's portfolio, which has a Jensen's measure of -0.24. Which portfolio performed better? Explain.

c. Use your findings in part a to discuss the performance of Chee's portfolio during the period just ended.

Portfolio
A portfolio is a grouping of financial assets such as stocks, bonds, commodities, currencies and cash equivalents, as well as their fund counterparts, including mutual, exchange-traded and closed funds. A portfolio can also consist of non-publicly...