Question 21: I am interested in constructing the best possible portfolio from a set of securities, S1, S2, and S3, each of which has an expected return E(r) and volatility or risk s. Below I see their risk-return characteristics.
Suppose the risk-free rate is 0.65%. Rank the three securities from lowest to highest according to the slope of their Capital Allocation Line, that is, their Sharpe ratio:
	Securities	Expected Return and Volatility		Risk-free rate
		E(r)	s	Sharpe ratios
	S1	5,0%	3,0%
	S2	4,0%	3,5%
	S3	6,0%	3,6%
Question 22: Note the (incomplete) variance-covariance matrix S shown in the spreadsheet. If the correlation between S1 and S2 is 0.45, that between S2 and S3 is 0.02, and that between S1 and S3 is 0.5, fill in the remaining elements of the variance-covariance matrix.
	Variance-covariance matrix S
	S1	S2	S3
S1	0,00090	0,00047	0,00054
S2	0,00047	0,00123	0,00000
S3	0,00054