Two investment advisors are comparing performance. One averaged a 19 percent rate of return and the other

Question:

Two investment advisors are comparing performance. One averaged a 19 percent rate of return and the other a 16 percent rate of return. However, the beta of the first investor was 1.5, whereas that of the second was 1.

a. Can you tell which investor was a better predictor of individual stocks (aside from the issue of general movements in the market)?

b. If the T- bill rate were 6 percent and the market return during the period were 14 percent, which investor would be the superior stock selector?

c. What if the T- bill rate were 3 percent and the market return were 15 percent?

Stocks
Stocks or shares are generally equity instruments that provide the largest source of raising funds in any public or private listed company's. The instruments are issued on a stock exchange from where a large number of general public who are willing...