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:

Ultraviolet Light

Electromagnetic radiation with a wavelength shorter than that of visible light, but longer than X-rays, which is invisible to the human eye.

Sterilize Water

The process of eliminating all forms of life, including microorganisms, from water to make it safe for consumption or other uses.

Algal Blooms

Rapid increase or accumulation in the population of algae in water systems, often resulting in a discoloration of the water and causing harm to the aquatic environment, including the production of toxins that can affect animal and human health.

Nitrogen

A colorless, odorless, tasteless, gaseous element, that makes up about 78% of the earth's atmosphere and is a vital component of living organisms.