IOZ.AX	ETH-USD	MIN.AX
1.65%	46.17%	12.30%
1.70%	69.25%	8.19%
-1.12%	47.78%	-10.97%
0.36%	-23.53%	1.01%
-3.86%	-53.64%	-9.48%
3.09%	68.98%	5.94%
0.89%	-13.77%	2.67%
3.26%	-21.20%	-13.37%
0.74%	-4.68%	3.37%
1.47%	-34.77%	-8.28%
-1.37%	-17.72%	7.45%
-8.07%	-15.23%	-10.38%
-1.72%	-42.66%	7.02%
-0.13%	17.85%	1.44%
2.87%	-19.73%	2.26%
5.78%	27.73%	-4.87%
0.87%	3.49%	4.98%
1.13%	14.59%	-0.52%
1.50%	65.33%	-3.66%
3.99%	8.42%	-0.27%
1.50%	-24.78%	7.28%
-2.48%	-21.12%	-17.73%
1.92%	4.29%	1.21%
-1.77%	2.28%	9.33%
3.35%	-17.08%	8.60%
-2.14%	-15.03%	6.25%
4.19%	39.00%	3.39%
-7.73%	22.03%	-2.99%
-20.47%	-39.23%	-14.50%
7.67%	55.40%	20.11%
4.96%	11.26%	12.10%
1.64%	-2.02%	12.55%
0.25%	52.69%	21.59%
3.02%	25.91%	13.36%
-3.54%	-17.27%	-12.34%
1.00%	7.40%	0.20%
10.31%	59.04%	29.53%
1.23%	20.00%	15.84%
-0.07%	78.23%	-8.28%
1.44%	7.69%	10.39%
2.37%	35.47%	3.04%
4.98%	44.56%	25.59%
0.03%	-2.10%	-4.96%
2.20%	-16.22%	18.40%
0.50%	11.50%	17.27%
2.51%	35.39%	-12.86%
-2.54%	-12.58%	-15.95%
-1.32%	42.86%	-13.88%
-0.44%	8.01%	17.28%
2.79%	-20.49%	23.73%
-6.80%	-27.00%	-1.05%
2.28%	8.59%	-18.34%
6.86%	12.42%	16.49%
-2.09%	-16.80%	11.06%
-2.62%	-28.86%	9.07%
-8.75%	-45.05%	-24.40%
3.36%	57.55%	11.33%
1.07%	-7.60%	19.04%
-0.18%	5.26%	11.79%

Weights (w)
iShares Core ETF (IOZ.AX)
Ethereum (ETH-USD)
Mineral Resources (MIN.AX)

Returns (r )
iShares Core ETF (IOZ.AX)	0.260%
Ethereum (ETH-USD)	2.88%
Mineral Resources (MIN.AX)	2.71%

Variance-Covariance matrix (V)
	iShares Core ETF (IOZ.AX)	Ethereum (ETH-USD)	Mineral Resources (MIN.AX)
iShares Core ETF (IOZ.AX)	0.0020	0.0070	0.0028
Ethereum (ETH-USD)	0.0070	0.1056	0.0105
Mineral Resources (MIN.AX)	0.0028	0.0105	0.0151

Background Congratulations! You have been employed as a portfolio analyst at HL Capital. Your boss, Hongyi, has given you the first task involving portfolio optimization. Hongyi has a preference for low-risk assets. However, low-risk assets such as high-quality corporate bonds are not doing well at the moment, and this has adversely affected the overall return of his portfolio. Therefore, Hongyi decided to add more risky assets (such as cryptocurrencies) to his portfolio. After hours of research, Hongyi shortlisted the following: iShares Core ETF (IOZ.AX), Ethereum (ETH-USD), and Mineral Resources Limited (MIN.AX). The data file on Moodle comprises monthly returns of the three assets from November 2017 to September 2022. Three matrices have been set up: weights, returns and variance-covariance. . The "weights" matrix (w) contains the weights of the three assets in the portfolio that you will need to construct later. The weights must sum up to 100%. These weights are intentionally left blank for you to complete the assignment. The "returns" matrix (r) contains the average monthly returns of the three assets. This matrix has been filled out. Please do not modify. The "Variance-Covariance" matrix (V) provides the monthly variances of the three assets as well as covariances between the assets' returns. The variance of asset returns is a measure of how much an asset's return varies with respect to its average returns. A large variance implies higher risk (in the sense that there is more variation around the average return) while a small variance indicates lower risk. Covariance in the context of stock market indicates how any two assets' returns move together. A positive covariance indicates that the two assets' returns move in the same direction whereas a negative covariance implies that the two assets' returns move in the opposite direction. For a portfolio of 3 assets (say, A, B and C), the variance-covariance matrix will look like this: OA CAB OA,C UBA OB,C OCA OC,B of, og, 2: variances of the returns of assets A, B, and C. JA,B: covariance of the returns of assets A and B. Other covariances can be interpreted similarly.1. Currently, Hongyi wants to invest 20% of the capital in iShares Core while the remaining capital will be evenly split between Ethereum and Mineral Resources Calculate the monthly expected return of this portfolio using the following formula: Up = wr (w, r are the weights and returns matrices described above; r,, is the portfolio return) Report the answer in cell G20 in the spreadsheet. [2 marks] 2. Calculate the variance of the above portfolio using this formula: Var, = w Vw (V: the variance-covariance matrix Varp: portfolio variance)