A pension fund manager is considering three mutual funds. The first ia a stock fund, The second is a long-term bond fund, and The third is a money market fund that provides a safe return of 5%. The characteristics of the risky funds are as follows:

money market return: money market return

Stock fund: expected return- 28% Standard deviation- 39%

Bond fund: expected return- 20% Standard deviation- 26%

Correlation (rho): -0.2000

Based on the information above:

a) What is the Covariance between the stock and bond fund?

b) What is the investment proportion in the optimal risky portfolio for the stock fund?

c) What is the mean of the Optimal Risky Portfolio?

d) What is the Standard Deviation of the Optimal Risky Portfolio?

e) What is the reward-to volatility ratio of the Optimal Capital Asset Line? (the sharpe ratio)