Use the Table Below to Answer the Following Question(s)

question 45

Multiple Choice

Use the table below to answer the following question(s) .
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%.

Develop a quadratic optimization 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 2?

• A)90%
• B)25%
• C)50%
• D)75%

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Definitions:

College Diploma

is a certificate awarded by colleges upon the completion of a course of study, signaling the attainment of a specific academic level.

Discretionary Income

The portion of a person's income that remains available for spending, investment, or savings once taxes and essential personal expenses have been deducted.

Standard Of Living

refers to the level of wealth, comfort, material goods, and necessities available to a certain socioeconomic class or geographic area.

Spendthrifts

Individuals who spend money in an extravagant and uncontrolled manner.