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This paper by Robert Merton describes how to derive the efficient frontier equation. It is mostly straightforward except for equation 9, which I hope someone can help me with.

The idea is to combine equation 4 and 8 into equation 9. Here they are:

enter image description here

The first term of equation 9 looks wrong to me. Is it me or is it the paper?

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I've changed algebra tag to algebra-precalculus, since we don't use algebra tag anymore, see meta for details. (Of course, feel free to retag the question again if you find a more appropriated tag.) – Martin Sleziak Aug 23 '12 at 16:05

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