3) Consider a market that consists of only two assets, A and B. The risk-free rate, rf, is 3% and the expected return of the market, E(rm), is 13%. Some properties of the individual assets are given in the table below (with p denoting the correlation coefficient and w denoting the asset's weight in the market portfolio): w 02 Asset B 0.4 0.6 0.2 0.5 0.04 0.25 Pi, A 1 0.3 Pi,B 0.3 1 (h) What are the contributions of each asset to the reward-to-risk ratio of the market? Note: the contribution of individual assets to the reward-to-risk ratio of the market should be calculated as its contribution to the market expected excess return divided by its contribution to the market variance. (i) Suppose you had found that the contribution of asset A to reward-to-risk ratio of the market was 1 and that the contribution of asset B to the same ratio was 0.8. How could you construct a portfolio that beats the market? Could this be an equilibrium? 3) Consider a market that consists of only two assets, A and B. The risk-free rate, rf, is 3% and the expected return of the market, E(rm), is 13%. Some properties of the individual assets are given in the table below (with p denoting the correlation coefficient and w denoting the asset's weight in the market portfolio): w 02 Asset B 0.4 0.6 0.2 0.5 0.04 0.25 Pi, A 1 0.3 Pi,B 0.3 1 (h) What are the contributions of each asset to the reward-to-risk ratio of the market? Note: the contribution of individual assets to the reward-to-risk ratio of the market should be calculated as its contribution to the market expected excess return divided by its contribution to the market variance. (i) Suppose you had found that the contribution of asset A to reward-to-risk ratio of the market was 1 and that the contribution of asset B to the same ratio was 0.8. How could you construct a portfolio that beats the market? Could this be an equilibrium