1. Using the table below and assuming₁= 8,₂= 4, ₁₁ = 2, and ₁₂ = 2.5 1 2 I1 I2

calculate the following using the general multi-index model:

1. Expected returns.
2. Variance of return.
3. Covariance of return.

\begin{tabular}{cccc} \hline & \multicolumn{3}{c}{ Security } \\ \cline { 2 - 4 } & A & B & C \\ \hline ai & 2 & 3 & 1 \\ bi1 & 0.8 & 1.1 & 0.9 \\ bi2 & 0.9 & 1.3 & 1.1 \\ ci & 2 & 1 & 1.5 \\ \hline \end{tabular}