There are three horses in the race Redeeming Vices (RV), Gwendolyn (G), and Ernest (E). The Odds (net returns for a winning unit bet) on offer for these runners are 1/1,2/1, and 4/1, and the respective 'true' probabilities are 0.6, 0.3, and 0.1.

1) Show that the variances are 0.96,1.89,2.25, and the covariances are (RV with G) -1.08, (RV with E) -0.6, and (G with E) -0.45.

2) Find the Minimum Variance Portfolio for the 3-asset portfolio of bets.