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Assume you are a professional manager of large stock portfolios and use computer models based on nonlinear programming to guide them. - Investors are concerned
Assume you are a professional manager of large stock portfolios and use computer models based on nonlinear programming to guide them. - Investors are concerned about both the expected return and the risk. - One way of formulating their approach is as a nonlinear version of a cost-benefit trade-off problem: - Minimize Risk subject to Expected return Minimum acceptable level - Consider a portfolio with 3 stocks. - You have $100,000 to invest Question: a. What is the portfolio that will minimize the risk subject to achieving at least an 15% expected return? Please provide excel model and use solver to get the solution for this question. b. If you want to ignore the risk, what is the maximum expected return rate if you build the portfolio with these 3 stocks? How you can achieve it ( Please tell me how much money in dollar amount should be put on each stocks)
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