You have a portfolio with an expected rate of return of 12% and a volatility of 8%. The effective portfolio has an expected rate of return of 16% and a volatility of 14%. The risk-free rate is 2%.

a) Calculate the Sharpe ratio of your portfolio (1.5 points)

b) Calculate the Sharpe ratio for the effective portfolio. (1.5 points)

c) Suppose you want to maximize your expected return without increasing risk. How can you achieve this goal? What is your maximum expected return without increasing risk? (2 marks)