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A fund manager has P 10 million to invest in treasury bills, bonds, private placements and in risky venture. Relevant information about these various investments are presented below:       Investment   Yield rate p.a.   Maturity   Risk rating   Treasury Bill   6%   3 months   1   Bonds   8%   5 years   2   Private Placement   12%   6 months   4   Risky Venture   20%   3 years   8       Guidelines given by the fund manager were:   50% of the investment must have a maturity below one year   Investment in Risky venture should not exceed 20% of funds invested.   At least 30% should be invested in treasury bills.   Total investments in items risk rating above 3 should not exceed 40% of total funds invested.       Formulate an LP model that would optimize return for this portfolio where X1 = investment in Treasury bills, X2 = investment in bonds, X3 = investment in private placement, X4 = investment in risky venture

A fund manager has P 10 million to invest in treasury bills, bonds, private placements and in risky venture. Relevant information about these various investments are presented below:       Investment   Yield rate p.a.   Maturity   Risk rating   Treasury Bill   6%   3 months   1   Bonds   8%   5 years   2   Private Placement   12%   6 months   4   Risky Venture   20%   3 years   8       Guidelines given by the fund manager were:   50% of the investment must have a maturity below one year   Investment in Risky venture should not exceed 20% of funds invested.   At least 30% should be invested in treasury bills.   Total investments in items risk rating above 3 should not exceed 40% of total funds invested.       Formulate an LP model that would optimize return for this portfolio where X1 = investment in Treasury bills, X2 = investment in bonds, X3 = investment in private placement, X4 = investment in risky venture

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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A fund manager has P 10 million to invest in treasury bills, bonds, private placements and in risky venture. Relevant information about these various investments are presented below:  

   

Investment  

Yield rate p.a.  

Maturity  

Risk rating  

Treasury Bill  

6%  

3 months  

1  

Bonds  

8%  

5 years  

2  

Private Placement  

12%  

6 months  

4  

Risky Venture  

20%  

3 years  

8  

   

Guidelines given by the fund manager were:  

  1. 50% of the investment must have a maturity below one year  
  1. Investment in Risky venture should not exceed 20% of funds invested.  
  1. At least 30% should be invested in treasury bills.  
  1. Total investments in items risk rating above 3 should not exceed 40% of total funds invested.  

   

Formulate an LP model that would optimize return for this portfolio where X1 = investment in Treasury bills, X2 = investment in bonds, X3 = investment in private placement, X4 = investment in risky venture  

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