#7. The Hal Chase Investment Planning Agency is in business to help investors optimize their return from investment. Hal deals with three investment mediums: a stock fund, a bond fund, and his own Sports and Casino Investment Plan (SCIP). The stock fund is a mutual fund investing in openly traded stocks. The bond fund focuses on the bond market, which has a more stable, but lower, expected return. SCIP is a high-risk scheme, often resulting in heavy losses but occasionally coming through with spectacular gains. Average returns, their variances, and covariances are given in the accompanying table. Develop and solve a portfolio optimization model for this situation for a target return of 8%.

Complete the table of optimal allocations (fill in the blank blue boxes)

(Round to two decimal places as needed.)

B B D 1 2 Average return 3 Variance 4 Covariance with stock 5 Covariance with bond 6 Stock Bond SCIP 0.148 0.06 0.152 0.014697 0.000155 0.160791 0.000468 -0.00222 -0.00023 7 Investment Proportion Stock Bond SCIP B B D 1 2 Average return 3 Variance 4 Covariance with stock 5 Covariance with bond 6 Stock Bond SCIP 0.148 0.06 0.152 0.014697 0.000155 0.160791 0.000468 -0.00222 -0.00023 7 Investment Proportion Stock Bond SCIP