3. Suppose there are n +1 securities traded in the marketplace. One asset is riskless with certain future return Rs. The remainder are risky with uncertain future returns Ri expected return Ri, variance of return of, and covariance of returns 043, , - 1,..., n. Suppose also that all investors are mean-variance optimisers with homogeneous expec- tations (i) Show that the equilibrium expected return on any security i is given by: ER) - R/ + 6000(RA, R...) where 8 >0 and Rm is the return on the market portfolio. (NOTE: you do not need to prove Two-Fund Separation) (ii) Explain intuitively why the risk premium increases monotonically in cou( R, Rm) 3. Suppose there are n +1 securities traded in the marketplace. One asset is riskless with certain future return Rs. The remainder are risky with uncertain future returns Ri expected return Ri, variance of return of, and covariance of returns 043, , - 1,..., n. Suppose also that all investors are mean-variance optimisers with homogeneous expec- tations (i) Show that the equilibrium expected return on any security i is given by: ER) - R/ + 6000(RA, R...) where 8 >0 and Rm is the return on the market portfolio. (NOTE: you do not need to prove Two-Fund Separation) (ii) Explain intuitively why the risk premium increases monotonically in cou( R, Rm)