Question: You want to evaluate three mutual funds using the information ratio measure for performance evaluation. The risk-free return during the sample period is 6%, and

You want to evaluate three mutual funds using the information ratio measure for performance evaluation. The risk-free return during the sample period is 6%, and the average return on the market portfolio is 19%. The average returns, residual standard deviations, and betas for the three funds are given below.

	Average Return		Residual Standard Deviation		Beta
Fund A	20	%	4.00	%	0.8
Fund B	21	%	1.25	%	1.0
Fund C	23	%	1.20	%	1.2

The fund with the highest information ratio measure is

Funds A and B (tied for highest).

Fund B.

Fund C.

Fund A.

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