Problem 2: (25 points) No credits for just newers without showing the work! So, show your workel) After graduating from Florida, A&M University, you have decided to start your own farm. You are considering three potential options: (1) beef cattle production, (2) grow vegetables, or (3) cultivate citrus trees. All three require an investment of $100,000. The resulting profits for cach option over the last 5 years are displayed in Table A below: Table A: brestment Options Option 1 Option 2 Option 3 Year 1 $15 000 $45 000 $50 000 Years 50 000 40 000 65 000 35 000 35 000 40 000 Year 3 Year 4 25 000 25 000 20 000 55 000 15 000 30 000 Years What option is the riskiest one? Why? (25 points) Not to 55% b. Suppose that instead of investing in a single option, you decide to have a portfolio constituted of options 1 and 3 and you want to invest 40% and 60% of your wealth in options 1 and 3, respectively. Calculate the expected value and the risk level associated with this portfolio. (Do not forget to calculate the covariance). (10 points) Suppose you decide to have a portfolio constituted of options 1, 2, and 3 and you want to invest 25%, 50%, and 25% of your wealth in options 1, 2, and 3. respectively. Calculate the expected value and the risk level associated with this portfolio (125 points) Problem 2: (25 points) No credits for just newers without showing the work! So, show your workel) After graduating from Florida, A&M University, you have decided to start your own farm. You are considering three potential options: (1) beef cattle production, (2) grow vegetables, or (3) cultivate citrus trees. All three require an investment of $100,000. The resulting profits for cach option over the last 5 years are displayed in Table A below: Table A: brestment Options Option 1 Option 2 Option 3 Year 1 $15 000 $45 000 $50 000 Years 50 000 40 000 65 000 35 000 35 000 40 000 Year 3 Year 4 25 000 25 000 20 000 55 000 15 000 30 000 Years What option is the riskiest one? Why? (25 points) Not to 55% b. Suppose that instead of investing in a single option, you decide to have a portfolio constituted of options 1 and 3 and you want to invest 40% and 60% of your wealth in options 1 and 3, respectively. Calculate the expected value and the risk level associated with this portfolio. (Do not forget to calculate the covariance). (10 points) Suppose you decide to have a portfolio constituted of options 1, 2, and 3 and you want to invest 25%, 50%, and 25% of your wealth in options 1, 2, and 3. respectively. Calculate the expected value and the risk level associated with this portfolio (125 points)