A pension fund manager is considering three mutual funds. The first is a stock fund, the second is a 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: (Total 15 points) Expected Return Standard Deviation Stock funds (S) 15% 32% Bond funds (B) 9% 23% The correlation between the fund returns is 0.15. a. Use the formula below to compute the optimal portfolio weights. (5 points) W8 [E(Ts) - rolo's - [E(rs) rylogosPes [E(ro) - rp]os + [E(rs) ry]os - [E(ro) - ry+E(rs) - rylos usPes Ws = 1 -wg b. You manage $1000 for your client and your client wants an expected return of 10%. Using the optimal weights you got from part a, how much money do you invest in each of the three funds? (8 points)