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    Portfolio Investment Yield

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    a. Provide one set of weights for a portfolio of all three assets that will deliver a return of 18%.
    b. Show graphically and explain briefly how you would find the minimum variance portfolio set that would have an 18% return.
    c. Calculate the above set.

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    https://brainmass.com/business/accounting/portfolio-investment-yield-29961

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    a. Provide one set of weights for a portfolio of all three assets that will deliver a return of 18%.

    By definition, we know that W3 = 1 - W1 - W2
    Then W1*R1 + W2*R2 + W1*R3 = 18%
    20% W1 + 12%W2 + 16%(1 - W1 - W2) = 18%
    4% W1 - 4% W2 = 2%
    4% W1 = 2% + 4% W2
    W1 = 0.5 + W2
    So any combination of W1 = 0.5 + W2 will satisfy a return of 18%
    We can pick up W2 = 0.1, then W1 = 0.5 +0.1 = 0.6, and W3 = 1 - 0.1 - 0.6 = 0.3
    So the portfolio of (W1, W2, W3) = (0.6, 0.1, 0.3) will deliver a return of 18%.

    b. Show graphically and ...

    Solution Summary

    The solution displays the full mathematical calculations necessary to demonstrate the calculation for the three assets.

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