Question: 8.8.Reconsider the portfolio selection example given in Section 8.2. A fourth stock (Stock 4) now has been found that gives a good balance between expected

8.8.Reconsider the portfolio selection example given in Section 8.2. A fourth stock (Stock 4) now has been found that gives a good balance between expected return and risk. Using the same units as in Table 8.2, its expected return is 17% and its risk is 18%. Its joint risk per stock with Stocks 1, 2, and 3 is 0.015, 0.025, and 0.003, respectively. Still using a minimum acceptable expected return of 18%, formulate the revised quadratic programming model in algebraic form for this problem. Display and solve this model on a spreadsheet.

Stock 1 Stock 2 Stock 3 Stock 4
Expected Return 21% 30% 8% 17%
Risk (Stand. Dev.) 25% 45% 5% 18%
Joint Risk (Covar.) Stock 1 Stock 2 Stock 3 Stock 4
Stock 1 0.040 -0.005 -0.015
Stock 2 -0.010 -0.025
Stock 3 0.003
Stock 4

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