3. An Australian investment advisor has conducted a meeting with high net worth individuals and noted that they have a high risk appetite and are seeking highest return for every dollar invested. The high net worth individuals are successful business magnates and celebrity singers and actors. The following Table A shows the asset allocation and the expected returns for each asset class:

The variance-covariance of the three assets is given as the Table B below:

3.1) Use a matrix to present asset allocations of fund X, Y and Z, asset returns, and a matrix to present variance-covariance. Call them A, R, and B, if you wish

3.2) Select the appropriate Fund for the high net worth clients.

3.3) Derive the standard deviation of Fund X, Y and Z respectively. Please provide a short interpretation of the relative riskiness for suggesting the chosen fund to the client, based on the above matrices.

3.4) Suppose that only fund X, Y and Z are available for investors in the market. An investor desires a portfolio as follows:

Denote the desired portfolio as d. Present d as a column vector, and construct the desired portfolio from funds available in the market.