willsucceed

I took an education guess on this question. Since the Sharpe Ratios were relatively similar, I assumed that the option with -.75 correlation should be added. What the answer said to do was multiply the correlation (-.75) with the current stock’s Sharpe Ratio (.50) and then subtract the product from the fund’s Sharpe ratio. That is where they got the .958. Do this for the other two fund’s, highest result is chosen.