A pension fund manager is considering three mutual funds. The first is a stock fund, the second is a long-term government and corporate bond fund, and the third is a T-bill money market fund that yields a sure rate of 5.0%. The probability distributions of the risky funds are:

	Expected Return	Standard Deviation
Stock funds (S)	15%	32%
Bond funds (B)	9%	23%

The correlation coefficient between the returns of stock funds and bond funds is .15.

You invest in all three funds. Use the formula below to compute the optimal portfolio weights. What is the sharp ratio of the best CAL? You manage $1000 for your client and your client wants an expected return of 10%. How much money do you invest in each of the three funds?