You are looking to combine stock & bond portfolios. The risk and return data are as follows:

Risk-free rate = 3.0%

E(rtn) stocks = 10%

Volatility stocks = 15%

E(rtn) bonds = 6%

Volatility bonds = 8%

The correlation between stocks & bonds is 0.25.

Complete the Excel table (see below) showing varying proportions of stocks & bonds in 5 percentage point increments.Identify the following in the Excel spreadsheet submission:

a) Optimal risky portfolio (i.e. the optimal combination of stocks and bonds)

b) What is the return, risk and Sharpe Ratio of the optimal risky portfolio?

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