3. Stock XYZ has an expected return of 12% and risk of =1. Stock ABC has expected return of 13% and =1.5. The market's expected return is 11%, and rp5%. (1096) a. According to the CAPM, which stock is a better buy? b. what is the alpha of each stock? Plot the SML and each stock's risk-return point on one graph. Show the alphas graphically