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# Consider the information shown in the table below and answer the questions that follow. Total portfolio return Portfolio standard deviation Portfolio...

Consider the portfolio information shown in the attach file and answer the questions that follow.

Consider the information shown in the table below and answer the questions that follow. Matt’s Portfolio Julie’s Portfolio Total portfolio return 12% 15% Portfolio standard deviation 10% 16% Portfolio Beta 1.1 1.9 Risk-Free Rate 4% Market Return 10% a. Calculate Sharpe’s measure for Matt and for Julie. Show work and express the answers as decimals rounded to two decimal places. b. Calculate Treynor’s measure for Matt and for Julie. Show work and express the answers as percentages rounded to two decimal places. c. Calculate Jensen’s alpha for Matt and for Julie. Show work and express the answers as unrounded percentages. d. Very carefully explain why Matt’s portfolio would be considered better than Julie’s portfolio, even though Julie’s had a higher return. In other words, WHY are the measures higher for Matt than for Julie? If you are going to use definitions, make sure you also explain the definitions in your own words so that you are showing an understanding of why Matt’s portfolio is better.

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SOLUTION
Given:
Matt’s
Julie’s Portfolio
Portfolio
Total portfolio return (Rp)
12%
15%
Portfolio standard deviation (σp)
10%
16%
Portfolio Beta (βp)
1.1
1.9
Risk-Free Rate (Rf)
4%
Market...

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