(Constructing a portfolio to match target return) Melissa Jones wants to invest in a portfolio composed of stocks ABC and XYZ (see below) that will yield a return of 19%. What is the weight of each stock in such a portfolio, and what is the portfolio’s standard deviation? Answer the question both by using Excel’s Goal Seek or Solver and by using the mathematical formulas in Chapter 8, Section 8.3.

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1 2 ABC 3 XYZ A B 4 Covariance(ABC,XYZ) 5 Correlation (ABC,XYZ) Expected return 15% 25% 0.0865 C Standard deviation of return 0.5698