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

Micro Forecasts
Asset	Expected Return (%)			Beta	Residual Standard Deviation (%)
Stock A		24		1.5		57
Stock B		21		1.9		66
Stock C		18		0.8		59
Stock D		15		1.2		55

Macro Forecasts
Asset	Expected Return (%)			Standard Deviation (%)
T-bills		9			0
Passive equity portfolio		17			28

a. Calculate expected excess returns, alpha values, and residual variances for these stocks. (Negative values should be indicated by a minus sign. Do not round intermediate calculations. Round "Alpha values" to 1 decimal place.)

	Stock A		Stock B		Stock C		Stock D
Excess returns		%		%		%		%
Alpha values		%		%		%		%
Residual variances

b. Compute the proportion in the optimal risky portfolio. (Do not round intermediate calculations. Enter your answer as decimals rounded to 4 places.)

Proportion

c. What is the Sharpe ratio for the optimal portfolio? (Do not round intermediate calculations. Enter your answers as decimals rounded to 4 places.)

Sharpe ratio

d. By how much did the position in the active portfolio improve the Sharpe ratio compared to a purely passive index strategy? (Do not round intermediate calculations. Enter your answers as decimals rounded to 4 places.)

Active portfolio

e. What should be the exact makeup of the complete portfolio (including the risk-free asset) for an investor with a coefficient of risk aversion of 1.8? (Do not round intermediate calculations. Round your answers to 2 decimal places.)

	Final Positions
Bills		%
M		%
A		%
B		%
C		%
D		%
Total		%