QUESTION 4 Suppose you have the following micro and macro forecasts for the next year. Stock Expected return Beta Total Risk A 20% 1.2 30% B 22% 1.5 40% Market portfolio 15% ? 20% Treasury bills(risk-free) 3% ? ? a) (5 pts) Calculate the alphas and residual(idiosyncratic) variances for A and B. b) (5 pts) Find the relative weights of Stock A and B. Lets put it differently, if you invest $1000 in B, how much should you invest in A?