You just received your annual performance statement from your investment advisor. The statement indicates that your...

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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?

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1 Riskadjusted rate of return refers to the rate of return that is computed as per the method given by Treynor ratio In such ratio difference between actual return and risk free rate is divided by the beta of stock or portfolio to compute the differential return on per unit of risk Following is the computation of Risk adjusted rate of return for portfolio Treynor Ratio Risk Adjusted Rate of Return See Answer

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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?