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

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, beta and residual standard deviations for the three funds are given below. Fund A B Average Return 18% 20% 23 Beta 0.65 0.90 1.20 Residual standard deviation 3.20% 2.40% 1.60% The fund with the highest information ratio measure is O a. Fund B. O b. Fund A O c. Fund C. O d. Funds A and C (tied for highest). e Funds A and B (tied for highest)

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