Consider the annual returns produced by two different active equity portfolio managers (A and B) as well as those to the stock index with which they are both compared:

Period Manager A Manager B Index

1 13.4 % 13.8 % 11.5 %

2 -3.1 -4.2 -2.4

3 14.2 13.7 18.8

4 0.5 2.2 -0.9

5 -7.5 -5.9 -3.2

6 24.5 26.0 21.5

7 -11.0 -12.1 -13.7

8 5.2 5.4 5.7

9 3.6 3.5 2.3

10 19.0 18.0 19.7

A). Did either manager outperform the index, based on the average annual return differential that he or she produced relative to the benchmark? Use a minus sign to enter negative values, if any. Do not round intermediate calculations. Round your answers to two decimal places.

Manager A: % __________

Manager B: % _________

-Select-Manager A Manager B 's average return is less than the index and -Select-Manager AManager B 's average exceeded that of the index.

B). Calculate the tracking error for each manager relative to the index. Which manager did a better job of limiting his or her client's unsystematic risk exposure? Do not round intermediate calculations. Round your answers to two decimal places.

Manager A: ______ %

Manager B: ______ %

-Select-Manager A Manager B did the better job of limiting the client's exposure to unsystematic risk as the difference between manager's returns and those of the index has a -Select-larger smaller standard deviation.