ou follows three stocks with the following information:

Stock Name

Rouge

Noir

Blanc

Expected Return

$20\%$

$15\%$

$25\%$

Standard Deviation

$25\%$

$16\%$

$35\%$

Beta

$2$

$1\mathrm{.}75$

$2\mathrm{.}3$

The expected market return is $13\%$ and the risk$-$free rate is $4\%.$ Please use the information to answer the following questions:

If your client wants to buy one stock only and does not diversify her portfolio, which stock would you recommend and why?

If your client wants to pick one stock only to add to her well$-$diversified portfolio, which stock would you recommend and why?

Which stock has the highest Jensen$$s alpha?