Problem 5. Let us consider the market model with 3 uncorrelated stocks and 1 riskless bond. The risk-free return of the bond is R=0.02. Stock Returns Expected Return R1 0.40 R2 0.70 R3 0.10 R1 0.40 0 0 Cov(Ri, Rj) R2 0 0.20 0 R3 0 0 0.80 (a) Compute the market portfolio WM and the mean and variance of the market portfolio. (12 marks] (b) Compute the optimal mean-variance portfolio w = (W1, W2, W3, wy) in three stocks and one bond to max