Excel File link: https://docs.google.com/spreadsheets/d/13elx_x6gOfWCWI11OsEXfuUH19hcXSvcqAm0570KDGw/edit?usp=sharing

Provided in the excel file are annual total returns for the S&P 500 Index and for a Treasury Bond fund spanning the period 1928-2021. Assume a constant risk-free rate of 3.33% whenever necessary.

1. What is the average annual return for the S&P 500?

2. What is the Sharpe Ratio for the S&P 500?

3. What is the Sharpe Ratio for the Treasury bond fund?

4. What is the Sharpe Ratio of a 60/40 portfolio that (in every year) invests 60% into the S&P 500 and 40% into the Treasury bond fund?

5. Suppose you invested $1 into the S&P 500 index at the beginning of 1928 and you reinvested dividends along the way. How large is your investment at the end of 2021?

6. Suppose you invested $1 into the 60/40 portfolio at the beginning of 1928 and you reinvested dividends along the way. How large is your investment at the end of 2021?

7. Rank the following investments from best to worst, based on the answers above and also generally. Explain why?

- 100% invested in S&P 500

- 100% invested in Treasury bonds

- 60/40 portfolio (60% in stocks, 40% in bonds)