3. In order to find the Minimum Variance Portfolio (MVP), which constraints do you include in the Markowitzs portfolio variance minimization process? Assume no short sale is allowed.

I) Expected Return = a specified return

II) The weight on each stock must be greater than or equal to zero

III) The sum of all weights must add to 100%

a.I only b.II and III only c. I and III d.I, II, and III

4. Firm ZXY has $20 mil in Debt, $30 mil in Book Value, $90 mil in Total Asset and a market value of $65 mil. The earning for the year is $8 mil. Its return on capital is

a.16.0% b.9.4% c.8.89% d.5.71%