Question 1 A fund manager asks his investment advisors to help him choose one of the mutual funds provided by an investment company. He is planning to invest in his portfolio to bring more diversification. But he insists that the fund to be included should have high return and low risk. The advisors are presented with the data of those two funds which consist of real estates, public equity fixed income and private equity. Details about the funds, performance and their weights are given in the table below: Mutual Fund A Mutual Fund B Return Weights in Public Iquity 0.125 52500 0.125 48000 Fixed income 0.084 21500 0.078 64000 Real 0.205 9000 0.215 5600 Private Equity -0.092 10500 -0.068 9800 5. Canada bond rate is 3.5%. Calculate the Sharpe ratio. What do you understand by risk free rate and why do we use it in this calculation? 6. Put your results on a decision table and justify your choice of the mutual fund if you were the investment advisor [45]