The following returns were earned last year: Fund A,10%,Fund B,24%,the overall market,14%.Fund A's beta was 0.8 while Fund B's was 2.0.Therefore,the best investment was the overall market.

Question

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Fund A's return was 10% and its beta was 0.8. The expected return for Fund A is 14% * 0.8 = 11.2%. Fund B's return was 24% and its beta was 2.0. The expected return for Fund B is 14% * 2.0 = 28%. The overall market's return was 14%. Therefore, the best investment was Fund B, not the overall market.

The Following Returns Were Earned Last Year: Fund A,10%,Fund B,24%,the