In the example below, the scientific method is used to solve…

In the example below, the scientific method is used to solve a daily life problem. Choose the correct order of the scientific method steps (numbered items) with the process of solving the everyday problem (lettered items).   Observation Question Hypothesis Prediction Experiment Result   If something is wrong with the outlet, my microwave also won’t work when plugged into it. There is something wrong with the electrical outlet. I plug my microwave into the outlet. My microwave works. Why doesn’t my toaster work? My toaster doesn’t toast my bread.

There are three risky assets in your optimal risky asset por…

There are three risky assets in your optimal risky asset portfolio:     Exp. Ret. Std. Dev. Wts in optimal portfolio                      Correlation Stock Fund Bond Fund Comm. Fund Stock Fund 13% 27% 10.6% 1 20% 35% Bond Fund 6% 11% 67.2% 20% 1 -30% Commodity Fund 12% 30% 22.2% 35% -30% 1   The risk free rate is 2%   a.  Describe The process used to derive the risky asset weights in the optimal portfolio. (3 points) b.  Calculate the expected return of the optimal risky portfolio (write out the equation). (3 points) c.  Calculate the standard deviation of the optimal risky portfolio (write out the equation). (4 points) d.  Calculate the Sharpe ratio of the optimal risky portfolio (write out the equation). (3 points) e.  If the highest standard deviation I am willing to accept is 8%,        i.  How much do I invest in the optimal risky portfolio? How much do I invest in the risk-free asset?  (4 points)       ii.  What is my expected return for this portfolio? (3 points)       iii.  What is the Sharpe ratio of this portfolio?  (3 points) f.  If I require an expected return of 10% and can only invest in the stock fund and the bond fund,       i.  What are my weights in those two funds?  (3 points)       ii.  What is the standard deviation of that portfolio? (3 points)       iii.  What is the Sharpe ratio of that portfolio? (3 points) g.  If my risk aversion parameter is 4.6, how much wealth should I allocate to my optimal risky portfolio and how much to the risk free asset? (4 points)