1. Suppose you invest $1,000 in Ford stock, and $3,000 in Tyco International stock. You expect a return of 10% for Ford and 16% for Tyco. The standard deviation of the return of Ford is 25% and the standard deviation of return of Tyco is 35%. The correlation between the returns of the two stocks is 0.7. The risk-free rate is 2%. What is the Sharpe Ratio of your portfolio?

1. 0.287
2. 0.404
3. 0.526
4. 0.725