16. Financial Analysts, Inc., is an investment firm that manages stock portfolios for a number of clients. A new client is requesting that the fim handle an $80,000 portfolio. As an ini- tial investment strategy, the client would like to restrict the portfolio to a mix of the follow- ing two stocks: Price/ Share Maximum Estimated Annual Return/Share Possible Investment Stock Oil Alaska Southwest Petroleum $50 $30 $6 $4 $50,000 $45,000 Let x = number of shares of Oil Alaska y = number of shares of Southwest Petroleum a. Develop the objective function, assuming that the client desires to maximize the total annual return. b. Show the mathematical expression for each of the following three constraints: (1) Total investment funds available are $80,000. (2) Maximum Oil Alaska investment is $50,000. (3) Maximum Southwest Petroleum investment is S45,000.

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16. Financial Analysts, Inc., is an investment firm that manages stock portfolios for a number
of clients. A new client is requesting that the firm handle an $80,000 portfolio. As an ini-
tial investment strategy, the client would like to restrict the portfolio to a mix of the follow-
ing two stocks:
Maximum
Price/
Estimated Annual
Possible
Stock
Share
Return/Share
Investment
$50
$30
Oil Alaska
$50,000
$45,000
$6
Southwest Petroleum
$4
Let
x = number of shares of Oil Alaska
y = number of shares of Southwest Petroleum
a. Develop the objective function, assuming that the client desires to maximize the total
annual return.
b. Show the mathematical expression for each of the following three constraints:
(1) Total investment funds available are $80,000.
(2) Maximum Oil Alaska investment is $50,000.
(3) Maximum Southwest Petroleum investment is $45,000.
Transcribed Image Text:16. Financial Analysts, Inc., is an investment firm that manages stock portfolios for a number of clients. A new client is requesting that the firm handle an $80,000 portfolio. As an ini- tial investment strategy, the client would like to restrict the portfolio to a mix of the follow- ing two stocks: Maximum Price/ Estimated Annual Possible Stock Share Return/Share Investment $50 $30 Oil Alaska $50,000 $45,000 $6 Southwest Petroleum $4 Let x = number of shares of Oil Alaska y = number of shares of Southwest Petroleum a. Develop the objective function, assuming that the client desires to maximize the total annual return. b. Show the mathematical expression for each of the following three constraints: (1) Total investment funds available are $80,000. (2) Maximum Oil Alaska investment is $50,000. (3) Maximum Southwest Petroleum investment is $45,000.
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