Why does combining stocks and bonds result

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Reference no: EM133492643

Question: Using the table created in the previous problem, the Sharpe Ratio of Stocks is 0.4667 and the Sharpe Ratio of Bonds is 0.375.

Why does combining stocks & bonds result in a higher Sharpe Ratio than either stocks or bonds alone? In other words, what mechanism allows that phenomenon to occur? Hint: No calculations are needed.

Reference no: EM133492643

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