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:

Develop and solve a portfolio optimization model for this situation for a target return of 12%.

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Stock Bond SCIP 0.148 0.152 0.060 Average retum Variance Covariance with stock 0.014697 0.000155 0.160791 -0.002222 0.000227 0.0004680 Covariance with bond