1. A fund begins with $ 10 million and reports the following monthly results: MONTH 2 3 Net inflows (end, $ million 3 0 HPR (%) 2 8 Compute the i) Arithmetic, ii) Time-weighted, and iii) $-weighted average monthly returns. 2. Sharpe ratio and capital allocation a. To estimate the Sharpe ratio of a portfolio from a history of asset returns, we use the different between the simple (arithmetic) average rate of return and the T-bill rate. Why not use the geometric average? b. When estimating a Sharpe ratio, would it make sense to use the average excess real returns that accounts for inflation? c. You have jus' decided upon your capital allocation for the next year, when you realize that you have underestimated both the expected return and the standard deviation of your risky portfolio by 4%. Will you increase, decrease, or leave unchanged your allocation to risk-free T-bills