A portfolio manager summarizes the input from the macro and micro forecasts in the following table:

Micro Forecasts

Asset	Expected Return (%)	Beta	Residual Standard Deviation (%)
Stock A	20	1.50	60
Stock B	18	2.00	40

Macro Forecasts

Asset	Expected Return (%)	Standard Deviation (%)
T-bills	5	0
Passive Equity Portfolio (m)	16	25

1A. Calculate the expected alpha values for stock A and Stock B.

Suppose that the portfolio manager follows the Treynor-Black model, and constructs an active portfolio (p) that consists of the above two stocks. The alpha of the active portfolio (p) is -18%, and its residual standard deviation is 150%.

1B. What is the Sharpe ratio for the optimal portfolio (consisting of the passive equity portfolio and the active portfolio (p) and what's the M2 of the optimal portfolio?