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(Constructing a portfolio to match target return) Melissa Jones wants to invest in a portfolio composed of stocks ABC and XYZ (see below) that will
(Constructing a portfolio to match target return) Melissa Jones wants to invest in a portfolio composed of stocks ABC and XYZ (see below) that will yield a return of 19%. What is the weight of each stock in such a portfolio, and what is the portfolio's standard deviation? Answer the question both by using Excel's Goal Seek or Solver and by using the mathematical formulas in Chapter 8, Section 8.3. 2 ABC 3 XYZ 4 Covariance (ABC,XYZ) 5 Correlation(ABC,XYZ) Expected Standard deviation return of return 15% 33% 25% 46% 0.0865 0.5698
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