Question: Harry contributes $15,800 to a 401(k) plan each year, and the company matches 10 percent of this annually, or $1,580. Harry can allocate the contributions

Harry contributes $15,800 to a 401(k) plan each year, and the company matches 10 percent of this annually, or $1,580. Harry can allocate the contributions among equities (earning 11 percent annually), bonds (earning 5 percent annually), and money market securities (earning 3 percent annually). He expects to work at the company 20 years. The employee can contribute annually along one of the three following patterns: The standard deviations of Equities, Bonds. Money market securities are 10%. The correlation between Equities and Bonds is 50%. The correlation between Equities and Money market securities is 50%. The correlation between Money market securities and Bonds is 50%. The risk free rate equals 0%. Assume that Harry chooses Option 2 under the above assumptions. What is the expected Sharpe ratio of his investment? (Round your numerical answer to 2 decimal places. (e.9., enter 0.08, but not 8% or 8.00% ))

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