Question: Consider the following data on returns (R), standard deviation (), and correlations (r) for stocks (asset 1), bonds (asset 2) and real estate (asset 3):

"Consider the following data on returns (R), standard deviation (), and correlations (r) for stocks (asset 1), bonds (asset 2) and real estate (asset 3): R1= 10%, 1= 4%, R2

= 20%, 2= 10%, R3= 13%, 3= 8%, r12= 0.8, r13=0.0, r23= 0.5. What is the reward to risk ratio (R/ ratio) of the portfolio that is invested 60% in stocks, 40% in bonds, and 0% in real estate?"

2.963

5.945

2.298

2.363

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