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Question 5 A fund sponsor would like to appraise the performance of one of its...

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Finance

Question 5 A fund sponsor would like to appraise the performance of one of its portfolio managers and has gathered the following information:

Average Return Standard Deviation
Portfolio 15.00% 24.00%
Market 12.00% 16.00%

The risk-free rate is 2.50% and the portfolios beta is 0.7.

(b) (i) Calculate and interpret the portfolios M2 measure and evaluate the portfolio performance.

(ii) Illustrate your answer to part (b)(i) graphically.

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