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All questions, if not otherwise specified, are based on the following information. A fund manager is considering three mutual funds. The first is a
All questions, if not otherwise specified, are based on the following information. A fund manager is considering three mutual funds. The first is 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 8%. The characteristics of the risky funds are as follows Expected Return Stock Fund Bond Fund 20% Standard Deviation 30% 12% 15% The correlation between the fund returns is 0.1 rho rf 0.1 8% To answer the questions, please round the answers to two decimal places. For example, if you answer is 1.95%, please fill 1.95 in the slot. If you answer is 11.95%, please fill 11.95 in the slot. When the answer is a Sharpe ratio, don't use the percentage format. For example, you should fill in 0.58 in the slot if you get a Sharpe ratio of 0.58.
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