You are considering for a client 3 investments as highlighted below. The first a stock, the second is a long-term corporate bond, and the third is a T-bill.

R(expected) Std Dev

T-Bill 8%

Bond 12% 12%

Stock 21% 25%

Correlation between S & B .15

a) what is the investment proportions in the minimum variance portfolio of the two risky funds, what is the expected return and standard deviation of that portfolio?

b) Draw the investment opportunity set highlighting the location of the min. variance portfolio as well as the optimal portfolio.

c) Calculate the Sharpe Ratio