Question: There are two mutual fund managers. Manager 1 eamed 21% in the past year, whereas manager 2 eamed 11% in the past year. The beta

There are two mutual fund managers. Manager 1 eamed 21% in

There are two mutual fund managers. Manager 1 eamed 21% in the past year, whereas manager 2 eamed 11% in the past year. The beta of the first manager is 1.8, whereas the beta for the second manager is 0.9. Assume CAPM is the correct model. Which manager is a better stock selector (i.e. who performed better on risk-adjusted basis)? (hint compare the actual return with the expected return according to CAPM) O Not enough information provided Both performed equally Manager 2 Manager 1

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