3.b. Bargav wealth managers had two portfolios but they have to decide which one of the following has to be offered to the client based on the following information:

                          Observed Return         Beta 

Portfolio A          25%                                1.75

Portfolio B          15%                                1.15

The risk-free rate is 7.5 %.

Return on the market portfolio is 14%

Standard Deviation of the market is 8%

In order to help Bargav wealth managers make decisions, calculate, Jensen index for Portfolio A and B, and identify which one of the two portfolios is better.

Answer rating: 100% (QA)

ACTUAL RETURN A25 Actual Return B15 CAPM return RfRmRf where ... View the full answer