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An Investor Is Developing a Portfolio of Stocks 0.00009P12+0.00032P22+0.00122P32 \quad 0.00009 \mathrm{P}_{1}^{2}+0.00032 \mathrm{P}_{2}^{2}+0.00122 \mathrm{P}_{3}^{2}

Question 64

Essay

An investor is developing a portfolio of stocks. She has identified 3 stocks in which to invest. She wants to earn at least 11% return but with minimum risk.
Let: Pi = proportion of total funds invested in i, i = A, B, C
The NLP for this problem is:
MIN: 0.00009P12+0.00032P22+0.00122P32 \quad 0.00009 \mathrm{P}_{1}^{2}+0.00032 \mathrm{P}_{2}^{2}+0.00122 \mathrm{P}_{3}^{2}
+2(0.00009P1P20.00011P1P30.00007P2P3) +2\left(-0.00009 \mathrm{P}_{1} \mathrm{P}_{2}-0.00011 \mathrm{P}_{1} \mathrm{P}_{3}-0.00007 \mathrm{P}_{2} \mathrm{P}_{3}\right. )

Subject to:
P1+P2+P3=10.1072P1+0.1068P2+0.1187P30.11P1,P2,P30P1,P2,P31\begin{array}{l}P_{1}+P_{2}+P_{3}=1 \\0.1072 P_{1}+0.1068 P_{2}+0.1187 P_{3} \geq 0.11 \\P_{1}, P_{2}, P_{3} \geq 0 \\P_{1}, P_{2}, P_{3} \leq 1\end{array}
What formulas should go in cells G4:J14 of the spreadsheet for this problem? NOTE: Formulas are not required in all of these cells.
 An investor is developing a portfolio of stocks. She has identified 3 stocks in which to invest. She wants to earn at least 11% return but with minimum risk. Let: P<sub>i </sub> = proportion of total funds invested in i, i = A, B, C The NLP for this problem is:  MIN:   \quad 0.00009 \mathrm{P}_{1}^{2}+0.00032 \mathrm{P}_{2}^{2}+0.00122 \mathrm{P}_{3}^{2}     +2\left(-0.00009 \mathrm{P}_{1} \mathrm{P}_{2}-0.00011 \mathrm{P}_{1} \mathrm{P}_{3}-0.00007 \mathrm{P}_{2} \mathrm{P}_{3}\right. )   Subject to:  \begin{array}{l} P_{1}+P_{2}+P_{3}=1 \\ 0.1072 P_{1}+0.1068 P_{2}+0.1187 P_{3} \geq 0.11 \\ P_{1}, P_{2}, P_{3} \geq 0 \\ P_{1}, P_{2}, P_{3} \leq 1 \end{array}   What formulas should go in cells G4:J14 of the spreadsheet for this problem? NOTE: Formulas are not required in all of these cells.       An investor is developing a portfolio of stocks. She has identified 3 stocks in which to invest. She wants to earn at least 11% return but with minimum risk. Let: P<sub>i </sub> = proportion of total funds invested in i, i = A, B, C The NLP for this problem is:  MIN:   \quad 0.00009 \mathrm{P}_{1}^{2}+0.00032 \mathrm{P}_{2}^{2}+0.00122 \mathrm{P}_{3}^{2}     +2\left(-0.00009 \mathrm{P}_{1} \mathrm{P}_{2}-0.00011 \mathrm{P}_{1} \mathrm{P}_{3}-0.00007 \mathrm{P}_{2} \mathrm{P}_{3}\right. )   Subject to:  \begin{array}{l} P_{1}+P_{2}+P_{3}=1 \\ 0.1072 P_{1}+0.1068 P_{2}+0.1187 P_{3} \geq 0.11 \\ P_{1}, P_{2}, P_{3} \geq 0 \\ P_{1}, P_{2}, P_{3} \leq 1 \end{array}   What formulas should go in cells G4:J14 of the spreadsheet for this problem? NOTE: Formulas are not required in all of these cells.

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