Based on current dividend yields and expected capital gains, the expected rates of return on portfolios A and B are 13.0% and 15.0%, respectively. The beta of A is .8, while that of B is 1.3. The T-bill rate is currently 7%, while the expected rate of return of the S&P 500 index is 14%. The standard deviation of portfolio A is 20% annually, while that of B is 41%, and that of the index is 30%.

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.) b) 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.)