Use the Table Below to Answer the Following Questions) Develop a Nonlinear Optimization Models Model to Find the Optimal

question 38

Multiple Choice

Use the table below to answer the following questions) .
Jonathan Reese is considering three stocks in which to invest with a fixed budget. The table below provides information on Jonathan's expected returns for each stock. The table also provides information, collected from market researchers, on the variance-covariance matrix of the individual stocks. He expects a total return of at least 10%. $$\begin{array} { | l | r | l | l | l | l | r | } \hline \begin{array} { l } \text { Reese's Stuck } \\\text { Investment } \\\text { Plan }\end{array} & & & & & & \\\hline & & & & & & \\\hline \text { Data } & & & & \\\hline & \text { Expected } & & & { \text { Variance-Covariance Matrix } } \\\hline & \text { Return } & & & \text { Stack 1 } & \text { Stack 2 } & \text { Stack 3 } \\\hline \text { Stack 1 } & 10 \% & & \text { Stack 1 } & 0.021 & 0.018 & - 0.003 \\\hline \text { Stack 2 } & 11 \% & & \text { Stack 2 } & 0.018 & 0.070 & 0.006 \\\hline \text { Stack 3 } & 9 \% & & \text { Stack 3 } & - 0.003 & 0.006 & 0.003 \\\hline \begin{array} { l } \text { Target } \\\text { Retum }\end{array} & 10 \% & & & & & \\\hline\end{array}$$ Develop a Nonlinear Optimization Models model to find the optimal allocation of the budget to each stock, and variance calculations for squared terms and cross-products based on the variance-covariance matrix.
-According to the model, what percentage of the budget should be allocated to Stock 1?

• A) 10%
• B) 25%
• C) 50%
• D) 40%

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Definitions:

Generator

A device that converts mechanical energy into electrical energy, commonly used for providing power in locations without access to the electrical grid.

Ohm Resistance

The measure of the resistance within an electrical circuit, quantifying how much a material opposes the flow of electric current.

Current Flow

The movement of electrical charge through a conductor, typically measured in amperes (amps), fundamental to electrical circuits and devices' operation.

Ohm's Law

A fundamental principle in electricity that states the current through a conductor between two points is directly proportional to the voltage across the two points.