Transcribed Image Text
You just received your annual performance statement from yourinvestment advisor. The statement indicates that your portfolioreturn for the past year was up 12%. In addition, you noticed,within the statement, that the S&P 500 rose 10.5%. Also, thestatement reflected that your portfolio had a beta 1.25. Furtheron, you noticed that the risk-free rate of return was 1.5%. To yourdismay, the statement did not provide what the risk-adjusted rateof return was for the year. Therefore, you called your investmentadvisor for a clarification. The investment advisor provides youwith the risk-adjusted rate of return. Are you happy with therisk-adjusted portfolio performance? Explain fully. What is theportfolio’s Risk-Adjusted Rate of Return and Jensen's AlphaMeasure?