Answer all three question KA pension fund manager decides to invest a total of at most $45 million in U.S. Treasury bonds paying 6% annualinterest and in mutual funds paying 8% annual interest. He plans to invest at least $5 million in bonds and at least$20 million in mutual funds. Bonds have an initial fee of $100 per million dollars, while the fee for mutual funds is$200 per million. The fund manager is allowed to spend no more than $8000 on fees. How much should be investedin each to maximize annual interest? What is the maximum annual interest?The amount that should be invested in Treasury bonds is $ million and the amount that should be invested inmutual funds is $ million.A company is considering two insurance plans with coverage andpremiums shown in the table. (For example, this means that $50 buys Fire/Theftone unit of plan A, consisting of $10,000 fire and theft insurance and$180,000 of liability insurance.) Answer parts (a) and (b).LiabilityPremiumPolicy A$10,000$180,000$50Policy B$15,000$120,000$40(a) The company needs at least $450,000 fire and theft insurance and at least $5,400,000 liability from these plans.How many units should be purchased from each plan to minimize the cost of the premiums? What is the minimumpremium?The company should purchase units of Policy A and units of Policy B., for a premium of $A candy company has 138 kg of chocolate-covered nuts and 78 kg of chocolate-covered raisins to be sold as twodifferent mixes. One mix will contain half nuts and half raisins and will sell for $7 per kg. The other mix will contain31nuts and raisins and will sell for $9.50 per kg. Complete parts a. and b.4(a) How many kilograms of each mix should the company prepare for the maximum revenue? Find the maximumrevenue.The company should prepare kg of the first mix and kg of the second mix for a maximum revenue of $

Information Provided: Total amount of investment = $45 million Treasury bond interest rate = 6%…

A pension fund manager decides to invest a total of at most $45 million in U.S. Treasury bonds paying 6% annual interest and in mutual funds paying 8% annual interest. He plans to invest at least $5 million in bonds and at least $20 million in mutual funds. Bonds have an initial fee of $100 per million dollars, while the fee for mutual funds is $200 per million. The fund manager is allowed to spend no more than $8000 on fees. How much should be invested in each to maximize annual interest? What is the maximum annual interest?

A pension fund manager decides to invest a total of at most $45 million in U.S. Treasury bonds paying 6% annual interest and in mutual funds paying 8% annual interest. He plans to invest at least $5 million in bonds and at least $20 million in mutual funds. Bonds have an initial fee of $100 per million dollars, while the fee for mutual funds is $200 per million. The fund manager is allowed to spend no more than $8000 on fees. How much should be invested in each to maximize annual interest? What is the maximum annual interest?

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

Problem 1PS

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A pension fund manager decides to invest a total of at most $30 million in U.S. Treasury bonds paying 4% annual interest and in mutual funds paying 8% annual interest. The fund manager plans to invest at least $5 million in bonds and at least $10 million in mutual funds. Bonds have an initial fee of $100 per million dollars, while the fee for mutual funds is $200 per million. The fund manager is allowed to spend no more than $5000 on fees. How much should be invested in each to maximize annual interest? What is the maximum annual interest?
A pension fund manager decides to invest a total of at most $35 million in U.S. Treasury bonds paying 3% annual interest and in mutual funds paying 5% annual interest. He plans to invest at least $ 5 million in bonds and at least $10 million in mutual funds. Bonds have an initial fee of $100 per million dollars, while the fee for mutual funds is $200 per million The fund manager is allowed to spend no more than $6000 on fees. How much should be invested in each to maximize annual interest? What is the maximum annual interest? The amount that should be invested in Treasury bonds is $_ million and the amount that should be invested in mutual funds is $_ million
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Suppose an individual invests £25,000 in a load mutual fund. The load fund entails an up-front commission charge of 4 percent of the amount invested and is deducted upfront. In addition, annual fund operating expenses are 0.85 percent, which is charged on the average net asset value invested in the fund. The return on this fund is 6 percent each year paid on the last day of the year. What would be the investor’s return on this fund after one year?
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As the Fund Manager for Bank of Trinidad and Tobago Limited, you are to advise the following two (2) clients based on their respective financial situations. a) Your best friend has asked to assist him in making the best investment out of the following options. Which would you advise him to choose and why? Show your workings to justify your response.Option 1: $12,000 in 5 years’ time at 6 percent interest.Option 2: $15,000 in 2 years’ time at 9 percent interest.Option 3: $15,000 today. No strings attached.Option4: $5,000 each year for 2 years at 7 percent interest compounded semi-annually. b) Betty Kay has a contract in which she will receive the following payment for the next 5 year: $1,000, $2,000, $3,000, $4,000 and $5,000. She will then receive an annuity of $8,500 a year for the end of the 6th through the end of the 15th year. She is offered a $30,000 to cancel the contract. If the payments are discounted at 14 percent should she cancel the contract?
Suppose an individual invests $20,000 in a load mutual fund for two years. The load fee entails an up-front commission charge of 2.5 percent of the amount invested and is deducted from the original funds invested. In addition, annual fund operating expenses are 0.55 percent. The annual fees are charged on the average net asset value invested in the fund and are recorded at the end of each year. Investments in the fund return 7 percent each year paid on the last day of the year. If the investor reinvests the annual returns paid on the investment, calculate the annual return on the mutual funds over the two-year investment period. Select one: a. 3.77% b. 5.09% c. 7.54% d. 8.86% e. 10.18%

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