John's current portfolio of S500,000 is invested as follows: Expected annual Current Value Annual standard return $100,000 Bonds 12% S250,000 HSBC shares 8% 12% S150,000 SaSa shares 10% 18% John soon expects to receive a gratuity of S200,000 and plans to invest the entire amount in an index fund that best complements the current portfolio. John is considering the following four index funds. His selection criteria are to maintain or increase the expected return of the current portfolio and maintain or reduce the volatility of his current portfolio. Expected an Annual standard Correlation of retuns with return current portfolio 9% Fund A 11% 0.8 10% Fund B 12% 0.9 Fund C 8% 10% 0.6 7% 996 Fund D 0.5 The annual standard deviation of John's current portfolio is 10.5%. (a) Determine the expected return of John's current portfolio. (b) Without doing any calculations, discuss and explain should include in his current portfolio. which fund John