question archive There is two questions based on the information given
Subject:MathPrice: Bought3
Investment |
Projected Rate of Return (%) |
Risk |
Municipal bonds |
5.2 |
Low |
Real estate stock |
10.5 |
High |
Pharmaceutical stock |
8.2 |
Moderate |
Domestic automobile stock |
8.4 |
Moderate |
A brokerage firm has been tasked with investing $800,000 for a new client with the following guidelines:
The client's goal is to maximize the return on investments.
The broker has prepared a list of high-quality stocks and bonds and their corresponding rates of return as shown in the table above.
Question 1:What is the optimal solution to this LP problem?
Question 2:) Would the optimal solution change if the rate of return from Pharmaceutical stocks investment decreases to 8.0% and all other rates of return are unchanged? Explain.
Copyable version of Chart:
Investment
Municipal bonds
Real estate stocks
Pharmaceutical stocks
Domestic automobile stocks
Projected Rate of Return (%)
5.2
10.5
8.2
8.4
Risk
Low
High
Moderate
Moderate