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(a) Formulate a linear programme to determine an investment plan that will maximize the the total return. (b) What is the expected return and the overall rate of return, if the optimal amount to be invested in securities Hexa and Deca are Rs. 333,000 And Rs. 167,000, respectively.

(a) Formulate a linear programme to determine an investment plan that will maximize the the total return. (b) What is the expected return and the overall rate of return, if the optimal amount to be invested in securities Hexa and Deca are Rs. 333,000 And Rs. 167,000, respectively.

Practical Management Science
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
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Do a and b only. 

An investor has a fund of Rs. 500,000 is considering investing in two securities 'Hexa' and 'Deca'. The risk and return associated with these securities is different. Security Hexa gives a return of 9% and with a risk factor of 5 on the scale of zero to ten. On the other hand, security Deca gives a return of 15% yet with a risk factor of 8 on the scale of zero to ten. The investor imposed the following restrictions on how to allocate the funds: The minimum returns on the investment should be 10 %, and the maximum combined risk should not be more than 6. (a) Formulate a linear programme to determine an investment plan that will maximize the the total return. (b) What is the expected return and the overall rate return, if the optimal amount to be invested in securities Hexa and Deca are Rs. 333,000 And Rs. 167,000, respectively.
Transcribed Image Text:An investor has a fund of Rs. 500,000 is considering investing in two securities 'Hexa' and 'Deca'. The risk and return associated with these securities is different. Security Hexa gives a return of 9% and with a risk factor of 5 on the scale of zero to ten. On the other hand, security Deca gives a return of 15% yet with a risk factor of 8 on the scale of zero to ten. The investor imposed the following restrictions on how to allocate the funds: The minimum returns on the investment should be 10 %, and the maximum combined risk should not be more than 6. (a) Formulate a linear programme to determine an investment plan that will maximize the the total return. (b) What is the expected return and the overall rate return, if the optimal amount to be invested in securities Hexa and Deca are Rs. 333,000 And Rs. 167,000, respectively.
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