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	18	2.00	50
Stock B	16	3.00	50

Macro Forecasts
Asset	Expected Return (%)	Standard Deviation (%)
T-bills	4	0
Passive Equity Portfolio (m)	14	20

Instruction: for part b, enter your response as a decimal number rounded to four decimal places.

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%.

What is the Sharpe ratio for the optimal portfolio (consisting of the passive equity portfolio and the active portfolio (p))? ( )

How much of the Sharpe ratio is contributed by the active portfolio? ( )

Whats the M² of the optimal portfolio? ( )