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There are two risky stocks and two scenarios. The chance for scenario 1 to happen is 40% and the chance for scenario 2 to happen

There are two risky stocks and two scenarios. The chance for scenario 1 to happen is 40% and the chance for scenario 2 to happen is 60%. The return of stock A is 30% in scenario 1 and 10% in scenario 2. The return of stock B is 20% in scenario and 50% in scenario 2. Assume the risk-free rate is 4%.

(1) What is the Sharpe ratio for stock A?

(2) What is the Sharpe ratio for stock B?

(3) If you invest 30% of weight in stock A and 70% of weight in stock B, which is the Sharpe ratio of your complete portfolio?

(2) What is the Sharpe ratio for stock B?

(3) If you invest 30% of weight in stock A and 70% of weight in stock B, which is the Sharpe ratio of your complete portfolio?

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