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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
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 is the squared term value for Stock 1 variance? Round to five decimal places. Click the icon to view the investment model. Investment Model x O A. 0.01132 OB. 0.00065 OC. 0.00283 OD. 0.00535 Reese's Stock Investment Plan Data Expected Return 10% 11% 9% Stock 1 Stock 2 Stock 3 Target Return Stock 1 Variance-Covariance Matrix Stock 1 Stock 2 Stock 3 0.021 0.018 -0.003 0.018 0.070 0.006 -0.003 0.006 0.003 Stock 2 Stock 3 10%
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