Question: Based on current dividend yields and expected capital gains, the expected rates of return on portfolios A and B are 7.1% and 8.3%, respectively. The

 Based on current dividend yields and expected capital gains, the expected

Based on current dividend yields and expected capital gains, the expected rates of return on portfolios A and B are 7.1% and 8.3%, respectively. The beta of A is .6, while that of B is 1.5. The T-bill rate is currently 4%, while the expected rate of return of the S&P 500 index is 8%. The standard deviation of portfolio A is 21% annually, while that of B is 42%, and that of the index is 31% Think about what are the appropriate performance measures to use in question a and b and why. a. If you currently hold a market index portfolio, what would be the alpha for Portfolios A and B? (Negative value should be indicated by a minus sign. Do not round intermediate calculations. Enter your answer as a percentage rounded to 1 decimal place.) Alpha Portfolio A Portfolio B b-1. If instead you could invest only in bills and one of these portfolios, calculate the sharpe measure for Portfolios A and B. (Enter your answer as a decimal rounded to 2 decimal places.) Sharpe Measure Portfolio A Portfolio B

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