3. Optimal portfolio choice with two risky asset and one risk-free asset: Jessica has $10,000. She can invest the money in (1) a corporate bond, (2) a stock, and (3) the risk-free T- bill. The table below provides these assets' expected returns and standard deviations: Bond (D) Stock (E) T-Bill Expected Return 7% 14% 2% Standard Deviation 15% 25% 0 The coefficient of correlation (PDE) between the corporate bond and the stock is 20%. Jessica has a risk aversion A=4. (e) Suppose that Jessica has not taken the investment class. For her risky portfolio, she invests 10% in the bond and 90% in the stock. Is the Sharpe ratio of her risky portfolio higher or lower than the Sharpe ratio of the optimal portfolio that you construct in (b) and why? (5%) (f) Jim has risk aversion A=3. Would Jim's optimal risky portfolio be the same as that in question (b)? Would Jim and Jessica choose the same overall optimal portfolio in question (d)? Explain. (5%) 3. Optimal portfolio choice with two risky asset and one risk-free asset: Jessica has $10,000. She can invest the money in (1) a corporate bond, (2) a stock, and (3) the risk-free T- bill. The table below provides these assets' expected returns and standard deviations: Bond (D) Stock (E) T-Bill Expected Return 7% 14% 2% Standard Deviation 15% 25% 0 The coefficient of correlation (PDE) between the corporate bond and the stock is 20%. Jessica has a risk aversion A=4. (e) Suppose that Jessica has not taken the investment class. For her risky portfolio, she invests 10% in the bond and 90% in the stock. Is the Sharpe ratio of her risky portfolio higher or lower than the Sharpe ratio of the optimal portfolio that you construct in (b) and why? (5%) (f) Jim has risk aversion A=3. Would Jim's optimal risky portfolio be the same as that in question (b)? Would Jim and Jessica choose the same overall optimal portfolio in question (d)? Explain. (5%)