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You have been provided with the below information related to potential returns on bonds and shares under different economic conditions. Scenario Boom Positive Growth Normal
You have been provided with the below information related to potential returns on bonds and shares under different economic conditions. Scenario Boom Positive Growth Normal Growth Negative Growth Recession Crash Probability Return.on.Shares Return.on.Bonds 8% 47% 15% 20% 23% 5% 31% 10% 4% 30% 6% 3% 6% -14% 3% 5% -17% -6% Question 6 Assuming a risk-free rate of 4.5%, calculate the optimal weight in shares and bonds that results in an optimal Sharpe Ratio. A) 153.77% in Bonds; -53.77% in Shares B) 136.68% in Bonds; -36.68% in Shares C) 114.81% in Bonds; -14.81% in Shares D) 123.01% in Bonds; -23.01% in Shares E) 110.71% in Bonds; -10.71% in Shares Correct answer is B
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