1. Consider the following three stocks: A, B and C. Their expected returns, correlations and standard deviations are given below.

	A	B	C
E[R]	7%	5%	10%
St. Dev.	15%	20%	17%

Correlation Matrix	A	B	C
A	1	0.2	0.6
B	0.2	1	0.1
C	0.6	0.1	1

Considering that the risk-free rate is 2%, please describe the stock allocations in the tangency portfolio. What is the Sharpe Ratio of the tangency portfolio (6 points)?