Compute the Sharpe Ratio. Please show your work.

For questions 12 to 16, use the following information. There are three stocks a, b, and c to invest. Their expected returns, volatilities, and correlation coefficients are as follows. E(ra) = 0.07, E(n) = 0.13, E(r) = 0.11, SD(ra)-0.18, SD(rb): 0.20, SD(r) 0.24, corr(a, .) = 0.1, corr(aTe) = 0.1, corrUnr.) = 0.7, 002 Suppose stock b is 6% undervalued and that is why its expected return is 6% higher than stock a. Likewise, suppose stock c is 4% undervalued and that is why its expected return is 4% higher than stock a. 12. Compute Sharpe ratio of stocks a, b, and c. 1) SR(ra)-0.20, SR(rb)-0.45, SR(rc)-0.32 2) SR(ra) 0.3, SR(rb) 0.55, SR(rc) 0.32 3) SR(ra) -0.24, SR(rb)-0.55, SR(re)-0.34 4) SR(a)-0.28, SR(%) = 0.55, SR(r)-0.38 5) SR(a)-0.45, SR(Tb-0.65, SR(re)- 0.40 13. Suppose you prefer higher expected return and lower volatility. If you have to choose only one portfolio among the followings with your choice of weights on assets, which one should you choose? (Hint: I made you compute Sharpe ratio in the previous question to help you solve this question.) 1) 2) A mix of Stock a and the riskfree asset F A mix of Stock c and the riskfree asset F