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: Assets Public Equity Fixed income Real Estate Private Equity Mutual Fund A Return Weights in s 0.125 52500 0.084 21500 0.205 9000 -0.092 10500 Mutual Fund B Return Weights in s 0.125 48000 0.078 64000 0.215 5600 -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