assign the weights arbitrarily. Below, I will use excel to choose the weights optimally.For now, I have placed the weights in cells J9 through J11 and given them the nameweights. Also, for convenience, I have created a column of ones and given it the nameones.To illustrate why the names are convenient, note that for given portfolio weights, themean return on the risky asset portfolio is equal to the transpose of the weights vectormultiplied by the mean vector. Using excel's matrix formula's, the transpose of theweights vector is given by "transpose(weights)", and to multiply "transpose(weights)" bythe mean vector "mu" simply requires using the excel function mmult, which stands formatrix multiplication. The resulting mean return for the portfolio is given bymmult(transpose(weights),ones). In this expression, excel multiplies the transpose of weights by the vector of ones, producing the mean return on the portfolio.To program the mean return and store it in a cell, one uses the excel format for matrixformulas. For example, to store the mean return for the given weight vector in cell N9,click on cell N9, and then type "= mmult(transpose(weights),mu)" and then hit CTRLSHIFT ENTER. The quantity in the cell will be equal to the mean return and will changewhen the weights change or when the elements of the mean return vector change.To program the variance of the portfolio return, I use the fact that the variance of theportfolio return is the transpose of the weights vector multiplied by variance covariancematrix multiplied by the weights vector. To program this, first I multiply the transpose of of weights vector times the variance-covariance matrix. This produces the expressionmmult(transpose(weights),vcov). Then, I have to multiply this expression by weights.Therefore, the final answer for portfolio variance ismmult(mmult(transpose(weights),vcov),weights). I have typed this expression into cellO9 using the same approach that I used for typing the mean return. Clicking on the cellwill highlight the formula at the top of the excel spreadsheet. By changing the weights orchanging the elements of the variance covariance matrix, the portfolio variance willchange. The standard deviation of the portfolio return is just the square-root of thevariance, and is given in cell P9. To compute portfolio std, I named portfolio varianceportvar. The formula for portfolio std (standard deviation) is just portvar^.5. It is enteredin cell P9 with an equal sign before the formula. Then you hit return to enter the formula.We are almost ready to start to use excel to compute the efficient frontier for this set of 3assets. To compute the efficient frontier, we need to constrain the portfolio weights sothat that they sum to 1. This is equivalent to imposing the condition thatmmult(transpose(ones),weights) sums to 1. We will impose this constraint when choosingportfolio weights. To do so, I have assigned the constraint to cell N17 by typing theformula mmult(transpose(ones),weights) into the cell. When I use the constrainedmaximization program, I will set the cell equal to 1, which will constrain the weights thatI can choose. I have chosen to name the constraint "constraint".