Problem 1 (Required, 30 marks) There are 1 riskfree asset and 3 risky assets available for trade in the market. You are given that The return of riskfree asset is 5% The expected returns of 3 risky assets are 3%, 6% and 8% respectively. The variances of asset return of these 3 risky assets are 0.01, 0.02 and 0.04 respectively. The returns of these 3 risky assets are mutually uncorrelated. . . . Questions: Solve the following problems using Lagrange method. Show all calculation details. (a) Suppose that an investor is seeking for the minimum variance portfolio, which contains risky assets only that has expected return equal 7%, find this portfolio. (b) Suppose that another investor is seeking for a minimum variance portfolio, which consists of riskfree asset, risky asset 1, risky asset 2 and risky asset 3, that has expected return equal 7%, find this portfolio. Problem 1 (Required, 30 marks) There are 1 riskfree asset and 3 risky assets available for trade in the market. You are given that The return of riskfree asset is 5% The expected returns of 3 risky assets are 3%, 6% and 8% respectively. The variances of asset return of these 3 risky assets are 0.01, 0.02 and 0.04 respectively. The returns of these 3 risky assets are mutually uncorrelated. . . . Questions: Solve the following problems using Lagrange method. Show all calculation details. (a) Suppose that an investor is seeking for the minimum variance portfolio, which contains risky assets only that has expected return equal 7%, find this portfolio. (b) Suppose that another investor is seeking for a minimum variance portfolio, which consists of riskfree asset, risky asset 1, risky asset 2 and risky asset 3, that has expected return equal 7%, find this portfolio