Problem 1 Consider four risky assets with variances o = 0.02, o = 0.05, o = 0.08, oz = 0.09, and expected rate of returns Mi = 0.08, M2 = 0.10, M3 = 0.11, My = 0.12, and covariances 012 = 0.001, 013 = 0.002, 014 = 0.001, 023 = 0, 024 = 0, 034 = 0.004. The risk-free asset has an interest rate of rf = 0.03. (a) Find the risky fund M to be combined with the risk-free asset. (b) Find the combined portfolio that will give the best expected rate of return for o c = 0.07. (c) Calculate the expected rate of return of the combined portfolio. You may use MatLab for calculations. Problem 1 Consider four risky assets with variances o = 0.02, o = 0.05, o = 0.08, oz = 0.09, and expected rate of returns Mi = 0.08, M2 = 0.10, M3 = 0.11, My = 0.12, and covariances 012 = 0.001, 013 = 0.002, 014 = 0.001, 023 = 0, 024 = 0, 034 = 0.004. The risk-free asset has an interest rate of rf = 0.03. (a) Find the risky fund M to be combined with the risk-free asset. (b) Find the combined portfolio that will give the best expected rate of return for o c = 0.07. (c) Calculate the expected rate of return of the combined portfolio. You may use MatLab for calculations