4. There are three risky stocks whose expected rates of return r and covariance matrix are given as r=0.080.100.18,=1.20.80.80.80.80.40.80.41.6 For convenience, the inverse of is also given as follows: 1=3.531340.510.51 Also, suppose in addition to these three risky stocks, there is a risk-free asset with risk-free rate 4%. (a) The investor want to achieve an expected rate of return 12%. Find the meanvariance efficient portfolio consisting of the risk-free asset and the three risky stocks. (5pts) (b) Assume that the same risk-free asset as in (a) is tradable. However, the investor is not allowed to either borrow money or invest more than her initial wealth in the risk-free asset, i.e., the percentage allocation in the risk-free asset w0 is restricted to be between 0 and 1 . What is the optimal portfolio consisting of the risk-free asset and risky stocks in this case? Why? (4pts)