An employee contributes $15,800 to a 401(k) plan each year, and the company matches 10 percent of this annually, or $1,580. The employee can allocate the contributions among equities (earning 11 percent annually), bonds (earning 5 percent annually), and money market securities (earning 3 percent annually). The employee expects to work at the company 20 years. The employee can contribute annually along one of the three following patterns:

The standard deviations of Equities, Bonds, Money market securities are 10%.

The correlation between Equities and Bonds is 50%.

The correlation between Equities and Money market securities is 50%.

The correlation between Money market securities and Bonds is 50%.

The risk free rate equals 0%.

Assume the employee chooses Option 2 under the above assumptions. What is the expected Sharpe ratio of this investment? (Round your numerical answer to 2 decimal places. (e.g., enter 0.08, but not 8% or 8.00%))

Option 2 50% 45% Option 3 40% 50% Option 1 Equities 60% Bonds 40% Money market 0% securities 100% 5% 10% 100% 100%