A market consists of four stocks whose expected returns are ri, r2, 13, 14 respectively. The…

A market consists of four stocks whose expected returns are ri, r2, 13, 14 respectively. The….

A market consists of four stocks whose expected returns are ri, r2, 13, 14 respectively. The risks of the stocks are 01, 02, 03, 04 respectively. You are given the following information: Stock 1: r1= 5%, 01 = 10% Stock2: r2= = 10%, 02 = 20% Stock 3: 13 = 20%, 03 = 30% Stock 4: 14 = 30%, 04 = 40% Stock 2 returns have a correlation of 50% with returns of Stock 1 and Stock 4. All other correlations are zero. Your client wants a portfolio P with desired return, r* = 25% and minimum possible risk. Let the weights of P be (W1, W2, W3, W4). Let ?? denote the risk of this portfolio.

A market consists of four stocks whose expected returns are ri, r2, 13, 14 respectively. The…