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3. (14pt) The annual estimates of the parameters for Boeing (B) and Microsoft (M) stocks are given below: MB = 01492, M = 0.3303, 0123

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3. (14pt) The annual estimates of the parameters for Boeing (B) and Microsoft (M) stocks are given below: MB = 01492, \"M = 0.3303, 0123 = 0.0695, ail = 0.1369, pBM = 0.0033 Assume a risk-free rate of 3% per year for the Tbill (risk free rate). (a) (6pt) Use the Lagrange multiplier method to derive the minimum variance port- folio. (b) (4pt) Suppose you desire a portfolio with an expected return of 14%. What should be the weights of this portfolio? What is its risk equal to? (c) (4pt) Suppose you desire a portfolio with a risk of 4%. What should be the weights of this portfolio? What is its expected return equal to

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