5.. Consider the two (excess return) index-model regression results for stocks A and B. The riskfree rate over the period was 8%, and the markets average return was 16%. Performance is measured using an index model regression on excess returns.

	Stock A	Stock B
Index model regression estimates	1% + 1.2(rM rf)	2% + .8(rM rf)
R-square	0.677	0.487
Residual standard deviation, (e)	12%	20.8%
Standard deviation of excess returns	23.3%	28.3%

Calculate the following statistics for each stock: (Round your answer to 4 decimal places. Omit the "%" sign in your response.)

		Stock A		Stock B
i.	Alpha	1	%	2	%
ii.	Information ratio	______?		______?
iii.	Sharpe measure	______?		______?
iv.	Treynor measure	8.8330		10.500

(((NUMBERS BELOW ARE NOT THE CORRECT ANSWERS)))

Information Ratio = Alpha/Standard deviation residual

For stock A, = 1/10.3 = 0.0971 For stock B, = 2/19.1 = 0.1047

Sharpe Measure = Excess returns / Standard deviation of excess returns

For stock A, = (1+1.2*(16-8))/21.6 = 0.4907 For stock B, = (2+0.8*(16-8))/24.9 = 0.3373