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Plz explain the formula used in this one! Stocks A and B have alphas of.01 and betas of .90. Stock A has a residual variance

Plz explain the formula used in this one!
Stocks A and B have alphas of.01 and betas of .90. Stock A has a residual variance of .020 while Stock B has a residual variance of .016. If stock A represents 2% of an active portfolio, stock B should represent of an active portfolio. A. 1 .6% B. 2.0% C. 2.2% D. 2.5% 010 IF'g ll',-ME( 02)= 0250 016 B01 020

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