Use the information for the multiple choice question 3 and 4.

The last year's performance for four mutual funds is presented below. The market return was 10.70%, last year with a standard deviation of 13.1% and the risk-free rate of return was 5%.

		Standard
Fund	Beta	Deviation (%)	Return (%)
A	1.50	18.95	12.5
B	1.20	12.41	13.0
C	0.90	9.30	11.2
D	0.50	8.10	9.5

Refer to above information. Compute the Jensen Measure for the B fund.

a.	1.16%
b.	2.31%
c.	6.90%
d.	9.60%
e.	10.13%

Refer to the above information and the results from Treynor ratio and Sharpe ratio, which portfolio would be your favorite and why? If you use mean-variance analysis to evaluate portfolios; and if the funds have been poorly diversified?

a.	C, the largest Sharpe ratio in the well diversified portfolio
b.	D, the largest Treynor ratio in the well diversified portfolio
c.	C, the largest Sharpe ratio in the poorly diversified portfolio
d.	D, the largest Treynor ratio in the poorly diversified portfolio
e.	All cash position, no risk