Two brokers at morgan stanley bob and simon are comparing


Two brokers at Morgan Stanley: Bob and Simon are comparing their performance last year. Bob averaged a 19% rate of return on his portfolio, while Simon averaged a 16% rate of return. The beta for Bob’s portfolio is 1.5 while the beta for Simon’s portfolio is 1.1. Assume that the return on the market is14% and the risk-free rate is 6%. Bob boasts to Simon that since his portfolio earned a higher return than Simon’s, Bob did a better job managing his portfolio. Is Bob correct? Explain your answer

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Financial Management: Two brokers at morgan stanley bob and simon are comparing
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