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

question 26

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 is the expected total return on all stocks?

• A) 18%
• B) 10%
• C) 11%
• D) 12%

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Definitions:

Life Expectancy

The average period that an individual is expected to live, often calculated from birth, based on a number of factors including historical data, current age, and health status.

Functional Aging

The changes in an individual's abilities and functional capacity as they age, often focusing on declines in physical, cognitive, and social capabilities.

Life Span

The maximum length of time an organism is expected to live, or the average length of time between the birth and death of individuals in a population.

Procedural Memory

A type of long-term memory that involves the unconscious recall of how to perform tasks or skills such as riding a bike or playing a musical instrument.