Markowitz Portfolio Model
Data								Target Return	Min. Variance	Stock 1	Stock 2	Stock 3
	Expected			Variance-Covariance Matrix				8%	0.004	0.28	0.03	0.69
	Return			Stock 1	Stock 2	Stock 3		9%	0.007	0.27	0.24	0.49
Stock 1	10%		Stock 1	0.025	0.015	-0.002		10%	0.012	0.25	0.45	0.3
Stock 2	12%		Stock 2		0.03	0.005		11%	0.02	0.24	0.66	0.11
Stock 3	7%		Stock 3			0.004		12%	0.03	0.00	1.00	0.00
Target Return	10%
Model
				Variance Calculations
	Allocation			Squared Terms	Cross-Products
Stock 1	0.25			0.001579256	0.003387
Stock 2	0.45			0.006053362	-0.000301067
Stock 3	0.30			0.000358718	0.001345191
Total	1
	Return	Variance
Portfolio	10.0%	0.012

4. For the Markowitz model in Example 14.10, deter- mine how the minimum variance and stock alloca- tions change as the target return varies between 8% and 12% (in increments of 1%) by re-solving the model. Summarize your results in a table, and create a chart showing the relationship between the target return and the optimal portfolio variance. Explain what the results mean for an investor. 4. For the Markowitz model in Example 14.10, deter- mine how the minimum variance and stock alloca- tions change as the target return varies between 8% and 12% (in increments of 1%) by re-solving the model. Summarize your results in a table, and create a chart showing the relationship between the target return and the optimal portfolio variance. Explain what the results mean for an investor