2) Please help to answer the following questions steps by steps

2. Given two assets with the following characteristics: E(RA) = 0.16 OA = 0.12 E(RB) = 0.06 OB = 0.06 PA. B= -0.50 a. What are the weights of A and B that would yield a minimum variance for the portfolio? What are the expected return, E(RMVP), and standard deviation, OMVP, of this minimum variance portfolio, MVP? (6 marks) Hints: @A or (0] - 20 A.B + 0 #) and @; =1-@, b. Suppose your client, Mr. X, is risk-averse with coefficient of risk aversion, A, equal to 8. The weights of A and B that would yield an optimal risky portfolio, R, with the highest utility are 0.7817 and 0.2183 respectively. What are the expected return, E(RR), standard deviation, OR, and utility level, UR, of this optimal risky portfolio, R? (6 marks) Hints: @A =- [E(R, )- E(R, )] + AG - GA.=] =0.7817 (: =1-@, =0.2183 C. According to the data given in question 2, the indifferent curve with maximum utility level is drawn in the below mean-variance plane. Draw the risky-asset investment opportunity set, the efficient frontier and various assets and portfolios according to the names in this question. Please FULLY label the diagram. (10 marks) Optimal portfolio without a risk free asset 18% Indifference curve of investor X with A = 8 that touches the efficient frontier and U" 14% 12% 10% 8% 0% 1% 20% 3% 8%% 9% 10% 11% 12% 13% 14% d. Describe what will happen to the old efficient frontier when a risk free asset at 6% is available (2 marks). Describe where the new efficient frontier will lie (2 marks). What is the name of this new efficient frontier (2 marks) and what is the composition of portfolios that lie on this new efficient frontier (2 marks)? (8 marks)