Question 1: Suppose there are two risky assets, A and B. You collect the following data on probabilities of different states happening and the returns of the two risky assets in different states: State Probability Return Asset A Return Asset B State 10.3 7% 14% State 20.4 6% -4% State 30.3 -8% 8% The risk-free rate of return is 2%. (a) Calculate expected returns, variances, standard deviations, covariance, and correlation of returns of the two risky assets. (b) There are three investors. The first one wants a portfolio with standard deviation of 3%, the second one wants a portfolio with standard deviation of 5%, and the third one wants a portfolio with standard deviation of 7%. Each investor has only $1,000 to invest. Describe how much each investor should allocate to different assets to create the desired portfolios. What is the expected return of the portfolio of each investor