Stocks A and B have the following historical returns:

Year	Stock As Returns	Stock Bs Returns
2015	(24.25%)	5.50%
2016	18.50	26.73
2017	38.67	48.25
2018	14.33	(4.50)
2019	39.13	43.86

1.Assume the risk-free rate during this time was 3.5%. What are the Sharpe ratios for Stocks A and B and the portfolio over this time period using their average returns?Note: enter your answers with 4 decimal places

a) Sharpe ratio for Stock A =

b) Sharpe ratio for Stock B =

c) Sharpe ratio for Portfolio AB =

2.Looking at the annual returns on the two stocks, would you guess that the correlation coefficient between the two stocks is closer to +0.8 or to 0.8?

3.If more randomly selected stocks had been included in the portfolio, which of the following is the most accurate statement of what would have happened to the standard deviation of the portfolio?