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Can someone look over this for me. Suppose an investor is mnsidering three stocks in which to invest. The expected return for stock 1 is

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Can someone look over this for me.

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Suppose an investor is mnsidering three stocks in which to invest. The expected return for stock 1 is 10%, for stock 2. 12%. and for stock. 3, ?%, and she would like an expected return of at least 10%. The Maritmvitz portfolio model to minimize the variance and the Solver Sensitivity Report for the model are available below. Complete parts a through c. Click here to view the Markowitz Model in Excel. Click here to view the initial sensitivity report a. Explain how to interpret the Lagrange multiplier value for the target portfolio return. The Lagrange multiplier for the target portfolio retum, 0.6321, is an approximam indicator of the shadow price. b. Suppose the target return is increased from 10% to 11%. How much is the minimum portfolio variance predicted to increase using the Lagrange Multiplier value? The Lagrange multiplier predicts that the minimum variance will increase by 0.000321 . (Type an integer or a decimal rounded to six decimal places.) c. Re-solve the model with the target retum of 11%. How much does the minimum variance actually change? The minimum variance increases by 0.006321 . (Round to six decimal places as needed.) Markowitz Portfolio Model Data Expected Variance-Covariance Matrix Return Stock 1 Stock 2 Stock 3 Stock 1 10% Stock 1 0.025 0.015 0.002 Stock 2 12% Stock 2 0.03 0.005 Stock 3 7% Stock 3 0.004 Target Return 10% Model Variance Calculations Allocation Squared Terms Cross-Products Stock 1 0.2513 =814^2*EG =F6 *814*815*2 Stock 2 0.4492 =815^2 *F7 =G6 *814*816*2 Stock 3 0.2995 =81642*GB -G7*815*816*2 Total =SUM(814:816) Return Variance Portfolio SUMPRODUCT(814:816,86:88) =SUM(E14:E16)+SUM(F14:F16)i Sensitivity Report A B C D E 1 Objective Cell (Min) 2 Cell Name Final Value 3 $C$21 Portfolio Variance 0.012422 4 5 Decision Variable Cells 6 Cell Name Final Value Reduced Gradient 7 $B$14 Stock 1 Allocation 0.2513 0.00 $B$15 Stock 2 Allocation 0.4492 0.00 9 $B$16 Stock 3 Allocation 0.2995 0.00 10 11 Constraints 12 Cell Name Final Value Lagrange Multiplier 13 $B$17 Total Allocation 1 - 0.03836359 14 $B$21 Portfolio Return 10% 0.6321 15 16

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