Hi.

I am busy working through a paper i came accross online on portfolio optimization. The paper may be accessed on the following link: http://ssrn.com/abstract=1483412 I am struggling, in particular, with the equation 5 on page 4. I am not sure how the authors managed to derive the equation. Why are only the first and last eigenvalues used???

Any ideas would be great!!!!

Many thanks in advance.