Look back at Problem 3 in Chapter 7. The risk-free interest rate in each of these years was as follows:

a. Calculate the average return and standard deviation of returns for Ms. Sauros's portfolio and for the market. Use these figures to calculate the Sharpe ratio for the portfolio and the market. On this measure did Ms. Sauros perform better or worse than the market?
b. Now calculate the average return that you could have earned over this period if you had held a combination of the market and a risk-free loan. Make sure that the combination has the same beta as Ms. Sauros's portfolio. Would your average return on this portfolio have been higher or lower? Explain your results.
Problem 3 in Chapter 7
During the boom years of 2010-2014, ace mutual fund manager Diana Sauros produced the following percentage rates of return. Rates of return on the market are given for comparison.

2010 2011 2012 2013 2014 Interest rate (%) 0.12 0.04 0.06 0.02 0.02 201020112012 2013 2014 Ms. Sa24.9 -0.9+18.6 2.15.2 S&P 500 17.2 1016.+33.1+12.7