Question: Please answer part b Jony Depp, a fund manager at Fidelity McGilIan fund, is using the capital asset pricing model for making recommendations to his

Please answer part b

Jony Depp, a fund manager at Fidelity McGilIan fund, is using the capital asset pricing model for making recommendations to his clients. He has produced the information shown in the following exhibit. Forecast Return Standard Deviation Stock X 22-00% Stock Y 21.25 31.25 1.875 Market rate ' Calculate expected return and alpha for each stock. [7 marks] Identify and justify which stock would be more appropriate for an investor who wants to add this stock to a well-diversied equity portfolio? Which stock would be more appropriate for a single-stock portfolio? Explain your answers. [7 marks]

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