Question

Chee​ Chew's portfolio has a beta of 1.23 and earned a return of 13.8% during the year just ended. The​ risk-free rate is currently 4.7%. The return on the market portfolio during the year just ended was 11.2%.

a. Calculate​ Jensen's measure​ (Jensen's alpha) for​ Chee's portfolio for the year just ended.

b. Compare the performance of​ Chee's portfolio found in part a to that of Carri​ Uhl's portfolio, which has a​ Jensen's measure of negative - 0.18 Which portfolio performed​ better? Explain.

c. Use your findings in part a to discuss the performance of​ Chee's portfolio during the period just ended.

a.The​ Jensen's measure​ (Jensen's alpha) for​ Chee's portfolio is ___. ​(Round to two decimal​ places.)

​ b. Chee's portfolio, with a JM of ____

▼

1.11

-0.18

outperformed​ Carri's portfolio, with a JM of

negative −0.18. A_________

▼

positive

negative

JM indicates that the _____

▼

actual

required

return exceeds the ____

▼

actual

required

return. A ____

▼

positive

negative

return on a portfolio means that it did not earn its ____

▼

actual

required

return. (Select from the​ drop-down menus.)

c. Use your findings in part a to discuss the performance of​ Chee's portfolio during the period just ended.  ​(Select the best answer​ below).

A. Based on its positive JM​, Chee's portfolio has performed Worse than the market.

B. Based on its negative JM​, Chee's portfolio has performed better than the market.

C. Based on its positive JM​, Chee's portfolio has performed better than the market

D. Based on its negative JM​, Chee's portfolio has performed worse than the market.

Answer 1

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