You Are Given the Following Means,standard Deviations,and Correlations for the Annual

question 1

Essay

You are given the following means,standard deviations,and correlations for the annual return on three stocks.The means are 0.12,0.15,and 0.20.The standard deviations are 0.20,0.30,and 0.40.The correlation between stocks 1 and 2 is 0.65,between stocks 1 and 3 is 0.75,and between stocks 2 and 3 is 0.41.You have $13,000 to invest and can invest no more than half of your money in any single stock.Determine the minimum variance portfolio that yields an expected annual return of at least 0.14.

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Definitions:

Effort

The amount of physical or mental energy expended to achieve a goal or perform a task.

Expectancy-value Theory

A psychological theory that explains motivation and behavior as a function of an individual's expectations for success and the value they place on achieving the goal.

Achievable

A term used to describe a goal or task that is possible to accomplish or attain with effort, skill, or resources.

Self-awareness

The recognition of one's own emotions, thoughts, and values, and understanding how they influence behavior.