Consider the two (excess return) index model regression results for Stock A and B. The risk-free rate over the period was 4%, and the markets average return was 15%. Performance is measured using an index model regression on excess returns.

	Stock A	Stock B
Index Model Regression Estimates	1% + 1.8(Rm -rf)	2.5% + 1.1(Rm-Rf)
R-Square	0.586	0.476
Residual standard deviation	12.3%	17.5%
Standard deviation of excess return	20.5%	25.9%

1. Calculate the following statistics for each stock (12 marks)

1. Alpha = A 1%. And B= 2.5%
2. Information ratio
3. Sharp ratio
4. Treynor measure

2. There is one of many stocks that the investor is analyzing to form an actively managed stock portfolio, please advise which of the statistics from (a) is the best choice and justify the reason.