Problem 18-9 Consider the two (excess return) index-model regression results for stocks A and B. The risk-free rate over the period was 7%, and the market's average return was 16%. Performance is measured using an index model regression on excess returns. Stock B Stock A 1% + 1.2(rm -rf) Index model regression estimates 2% + 0.8(rM - rf) 0.647 0.472 R-square Residual standard deviation, ole) Standard deviation of excess returns 11.5% 20.3% 22.8% 27.3% a. Calculate the following statistics for each stock (use whole percent values, 1%, not 0.01 for example, for your calculations): (Round your answers to 4 decimal places.) Stock A Stock B 1 0.0000 % 0.0000 % Alpha ii. Information ratio 8.7000 9.8500 21.0500 4.4000 iii. Sharpe ratio iv. Treynor measure 15.0000 4.0000 b. Which stock is the best choice under the following circumstances? b. Which stock is the best choice under the following circumstances? i. This is the only risky asset to be held by the investor. ii. This stock will be mixed with the rest of the investor's portfolio, currently composed solely of holdings in the market-index fund. iii. This is one of many stocks that the investor is analyzing to form an actively managed stock portfolio