1) Assets Stock fund Bond fund Expected Return Standard Deviation 14% 7% 26% 13% The correlation coefficient between the returns of the stock fund and the bond fund is 0.45. The return on the risk-free asset is 3%. a) Calculate the weights of the two assets that form the optimal risky portfolio. Also compute the expected return and standard deviation of the optimal risky portfolio. c) What is the highest attainable Sharpe ratio in the efficient frontier? d) Analysis: Why would a rational investor prefer the CAL in part b) over any other CAL?