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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 Probability Return.on.Shares Return.on.Bonds Boom

You have been provided with the below information related to potential returns on bonds and shares under different economic conditions.

Scenario Probability Return.on.Shares Return.on.Bonds
Boom 8% 47% 15%
Positive Growth 14% 44% 7%
Normal Growth 35% 6% 5%
Negative Growth 30% 2% 2%
Recession 5% -8% -1%
Crash 8% -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) 98.64% in Bonds; 1.36% in Shares B) 122.31% in Bonds; -22.31% in Shares C) 161.77% in Bonds; -61.77% in Shares D) 142.04% in Bonds; -42.04% in Shares E) 131.52% in Bonds; -31.52% in Shares

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