Question 3 [40 marks] Part I An individual wants to minimize the variance of a portfolio consisting of two assets: 1 & 2. The variance-covariance matrix is as follows: 0.1 -0.1 V = -0.1 0.2_ Determine the weights of assets 1 & 2 which will minimize the variance of the portfolio: (a) By using inverse of matrix [10 marks] (b) By using Cramer's method [10 marks] (c) Use a graphical representation to show where the minimum point is situated. [5 marks] Part II The individual decides to purchase a third asset. The variance of asset 3 is equal to 0.3 and the covariance of asset 3 with assets 1 and 2 is equal to zero. By using Cramer's Method find the minimum variance portfolio for the portfolio consisting of three assets. [15 marks]