Question: You want to evaluate three institutional funds using the information ratio measure for performance evaluation. The risk-free return during the sample period is 3%, and

You want to evaluate three institutional funds using the information ratio

You want to evaluate three institutional funds using the information ratio measure for performance evaluation. The risk-free return during the sample period is 3%, and the equity risk premium is 8%. The average returns, residual standard deviations, and betas for these three institutional funds are given below: Return Residual Standard deviation Beta 10% 25% 1.20 Fidelity Amerifund 8% 10% 0.80 Blackrock 6% 15% 1.00 Based on the Information Ratio of performance evaluation, which of the following institutional funds represents a profitable investment opportunity? The Amerifund represents a profitable investment opportunity The Fidelity Fund represents a profitable investment opportunity O None of them is a profitable investment opportunity The Blackrock fund represents a profitable investment opportunity

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