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Consider the two (excess return) index-model regression results for stocks A and B. The risk-free...

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Consider the two (excess return) index-model regression results for stocks A and B. The risk-free rate over the period was 6%, and the market's average return was 15%. Performance is measured using an index model regression on excess returns. Stock A 18 + 1.2(nr- Ef) 0.594 10.68 21.9% Stock B Index model regression estimates R-square Residual standard deviation, (e) Standard deviation of excess returns 2 + 0.8(ry-rf) 0.445 19.4% 25 . 5 a. Calculate the following statistics for each stock: (Round your answers to 4 decimal places.) Stock A Stock B i. Alpha i. Information ratio ii. Sharpe ratio iv. Treynor measure b. Which stock is the best choice under the following circumstances? i. This is the only risky asset to be held by the investor This stock will be mixed with the rest of the investor's portfolio, currently composed solely of holdings in the market-index fund ii. This is one of many stocks that the investor is analyzing to form an actively managed stock portfolio

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