Janet Dylan, a portfolio manager at Dylan Asset Management, is using the CAPM for making recommendations to her clients. Her research department has developed the information shown in the following table: Stock X Stock Y Market index Risk-free rate Forecast Return 8% 16% 12% 4% Standard Deviation 12% 40% Beta 0.6 1.4 Calculate the required return and alpha for each stock. Identify and justify which stock would be more appropriate for an investor who wants to: a. b. i. Add this stock to a well-diversified equity portfolio i. Hold this stock as a single-stock portfolio