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The Optima Mutual Fund has an expected return of 21.1% and a volatility of 18.6%. Optima claims that no other portfolio offers a higher Sharpe

The Optima Mutual Fund has an expected return of 21.1% and a volatility of 18.6%.

Optima claims that no other portfolio offers a higher Sharpe ratio. Suppose this claim is true, and the risk-free interest rate is 4.1%.

a. What is Optima's Sharpe ratio?

b. If eBay's stock has a volatility of 44.3% and an expected return of 10.5%, what must be its correlation with the Optima Fund?

c. If the SubOptima Fund has a correlation of 85% with the Optima Fund, what is the Sharpe ratio of the SubOptima Fund?

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