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1. A small stock that you are following has an alpha = 7% and a standard deviation of its regression residuals of 22.75%. The Sharpe
1. A small stock that you are following has an alpha = 7% and a standard deviation of its regression residuals of 22.75%. The Sharpe ratio of the market index portfolio M is 0.48. According to the Treynor-Black Model, by how much could this active investor improve his/her Sharpe ratio relative to investing only in the passive market index portfolio M? Enter your answer rounded to two decimal places.
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