You operate in a CAPM market and follow the consensus view on most assets. The one exception is stock A, where your research tells you that its expected return is Ta = 0.15 (15 per cent). In order to maximise your Sharpe ratio, you wish to take an active position in that stock, based on your beliefs about stock A. The market portfolio has an expected return of is Tm = 0.06 with a standard deviation of 0,15. The standard deviation of ra is 0.4, and the beta of stock A is a = 1.8. The risk-free bond G has rate rg = 0.01. Find the optimal mix of stock A and market M. Give a full explanation of the rationale for forming this portfolio, and discuss the relevance of the Appraisal Ratio of the active stock.