Question: 1. (a) A portfolio with a 25% standard deviation generated a return of 15% last year when T-bills were paying 4.5%. What is the Sharpe

1. (a) A portfolio with a 25% standard deviation generated a return of 15% last year when T-bills were paying 4.5%. What is the Sharpe ratio of this portfolio?

(b) You purchased a share of stock for $29. One year later you received $2.25 as dividend and sold the share for $28. What is the HPR (holding period return?

(c) You invest 70% of your wealth in a risky asset with an expected rate of return of 15% and a variance of 5%, and you put 30% in a Treasury bill that pays 5%. What is your portfolios expected rate of return and standard deviation? (Hint: what is the standard deviation of the risky asset?)

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