Please attach the answer with formulas and necessary explanation step by step. Thank you.

Problem 2. a) (5 pts) We have a financial market consisting of two risky assets. Assume that 0.1, 2 = 0.05, 1 = 0.2 and 2 = 0.15. If you know that the expected return of the minimum variance portfolio is larger than 7%, find the possible values of the correlation P12. b) (5 pts) We have a financial market with one risk-free and two risky assets. Assume that ,-0.1, ,-0.2, 2 = 0.15, cov(K, K2)--0% and R = 5%. Find 2 such that there is no arbitrage on the market (Hint: Construct a portfolio of the two risky assets with variance 0) c) (5 pts) We have a financial market with one risk-free and two risky assets. Assume that = 0.1, 2 = 0.12, 1 = 0.05, 2-0.10 and R = 5%. You are allowed to invest in the risk-free asset and only one of the risky assets. Which of the risky assets would you choose? What if the risk-free return was R-10%? (Hint: Compare the efficient frontiers.) Problem 2. a) (5 pts) We have a financial market consisting of two risky assets. Assume that 0.1, 2 = 0.05, 1 = 0.2 and 2 = 0.15. If you know that the expected return of the minimum variance portfolio is larger than 7%, find the possible values of the correlation P12. b) (5 pts) We have a financial market with one risk-free and two risky assets. Assume that ,-0.1, ,-0.2, 2 = 0.15, cov(K, K2)--0% and R = 5%. Find 2 such that there is no arbitrage on the market (Hint: Construct a portfolio of the two risky assets with variance 0) c) (5 pts) We have a financial market with one risk-free and two risky assets. Assume that = 0.1, 2 = 0.12, 1 = 0.05, 2-0.10 and R = 5%. You are allowed to invest in the risk-free asset and only one of the risky assets. Which of the risky assets would you choose? What if the risk-free return was R-10%? (Hint: Compare the efficient frontiers.)