You have been asked to construct a portfolio made up of an equity and bond fund. To conduct the analysis, you have been provided with 10 years worth of historical returns. Assume a risk-free rate of 6% and that expected future returns can be calculated using 10 year average of historical returns.

Equity_Fund Bond_Fund

13.29% 8.67%

21.99% 13.22%

43.43% 21.29%

16.05% 5.82%

25.28% 12.03%

8.05% 3.77%

13.99% 9.92%

12.29% 6.39%

8.59% -0.39%

17.3% 9.43%

Question 9 Calculate the Sharpe ratio of a fund that is made up of 44% Equity Fund and 56% Bond Fund.

A) 1.2044 B) 0.7172 C) 0.9022 D) 0.7578 E) 0.9202

Question 10 Calculate the efficient portfolio allocation between the Equity and Bond funds.

A) Invest -173.07% in the Equity fund and 273.07% in the Bond fund.

B) Invest -225.08% in the Equity fund and 325.08% in the Bond fund.

C) Invest -187.7% in the Equity fund and 287.7% in the Bond fund.

D) Invest -260.84% in the Equity fund and 360.84% in the Bond fund.

E) Invest -319.35% in the Equity fund and 419.35% in the Bond fund