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Table below shows the historical returns for Companies A, B and C Year Company A Company B Company C 1 30% 26% 47% 2 7%

Table below shows the historical returns for Companies A, B and C

Year

Company A

Company B

Company C

1

30%

26%

47%

2

7%

15%

-54%

3

18%

-14%

15%

4

-22%

-15%

7%

5

-14%

2%

-28%

6

10%

-18%

40%

7

26%

42%

17%

8

-10%

30%

-23%

9

-3%

-32%

-4%

10

38%

28%

75%

11

27.0%

23.4%

42.3%

12

6.3%

13.5%

-48.6%

13

16.2%

-12.6%

13.5%

14

-19.8%

-13.5%

6.3%

15

-12.6%

1.8%

-25.2%

16

9.0%

-16.2%

36.0%

17

23.4%

37.8%

15.3%

18

-9.0%

27.0%

-20.7%

19

-2.7%

-28.8%

-3.6%

20

34.2%

25.2%

67.5%

1. If one investor has a portfolio consisting of 70% Company A and 30% Company B, what are the average portfolio return and standard deviation? What is Sharpe ratio if the risk- free rate is 3.5%?

2.If another investor has a portfolio consisting of 1/3 Company A, 1/3 Company B and 1/3 Company C, what are the average portfolio return and standard deviation? What is Sharpe ratio if the risk-free rate is 3.5%?

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