A pension fund manager is considering three mutual funds. The first is a stock fund, the second is a long-term government and corporate bond fund, and the third is a T-bill money market fund that yields a sure rate of 5.5%.

The correlation between the fund returns is 0.15.

a. What would be the investment proportions of your portfolio if you were limited to only the stock and bond funds and the portfolio has to yield an expected return of 12%?

	Expected Return		Standard Deviation
Stock fund (S)	15	%	32	%
Bond fund (B)	9	%	23	%

	Investment Proportions
Stocks		%
Bonds		%

What would the Excel formula look like to solve?