Using the Jensen measure, three types of funds including the market index are ranked.
Jensen measure αp=rp-[rf+β0(rm-rf)]αA=5%-[3%+0.67×(8%-3%)]=- 1.35% αB = 12% - [3% + 1.5 × (8% - 3%)] = 1.5% αM = 0, then the ordering according to the Jensen measure is B, market portfolio, and A.