QUESTION 2 [ 25 MARKS]

Mrs Janes portfolio is made up of stocks Tesla and Boeing

Securities	Proportion invested	Expected Return (%)	Standard Deviation (%)
Tesla	0.30	20%	16%
Boeing	0.70	15%	14%

The correlation coefficient between Tesla Boeing is 0.15.

The return achievable from investing in government bonds is 2.73% and beta of the investment stands at 1.6.

(a) Calculate the risk and return of the investors portfolio. [7 Marks]

(b) Calculate the Sharpe Ratio. [4 Marks]

(c) Calculate the Treynor Index. [4 Marks]

(d) Being the Investment Advisor of Mrs Jane, explain to her on the asset allocation process. [10 Marks]