An investor has $70,000 to divide among several instruments. Municipal bonds have an 8.5% return, C D’s a 5% return, t-bills a 6.5% return, and growth stock 13%.The following guidelines have been established:No more than 20% in municipal bondsInvestment in growth stock fund should be greater than other three alternatives.At least 10% invested in treasury bills and municipal bondsLess should be invested in treasury bills and growth stocks than in CDs and municipal bonds by a ratio of 1.2 to 1.All $70,000 should be invested.Formulate a model and solve it using computer. How should the $70,000 be allocated to each alternative to maximize annual return? What is the annual return? Notes:Attach a Linear Programming computer file of the solution (QM for Windows - save it as a ".lin" file). Mac computer file is not accepted.Attach a Word file to answer the questions: How should the $70,000 be allocated to each alternative to maximize annual return? What is the annual return?

Given information:Investor has to allocate among four different investment options: Municipal…

Answered: An investor has $70,000 to divide among…

Advanced Engineering Mathematics

10th Edition

ISBN:9780470458365

Author:Erwin Kreyszig

Publisher:Erwin Kreyszig

Chapter2: Second-order Linear Odes

Section: Chapter Questions

Problem 1RQ

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An investor has $70,000 to divide among several instruments. Municipal bonds have an 8.5% return, C D’s a 5% return, t-bills a 6.5% return, and growth stock 13%.

The following guidelines have been established:

No more than 20% in municipal bonds
Investment in growth stock fund should be greater than other three alternatives.
At least 10% invested in treasury bills and municipal bonds
Less should be invested in treasury bills and growth stocks than in CDs and municipal bonds by a ratio of 1.2 to 1.

All $70,000 should be invested.

Formulate a model and solve it using computer. How should the $70,000 be allocated to each alternative to maximize annual return? What is the annual return?

Notes:

Attach a Linear Programming computer file of the solution (QM for Windows - save it as a ".lin" file). Mac computer file is not accepted.
Attach a Word file to answer the questions: How should the $70,000 be allocated to each alternative to maximize annual return? What is the annual return?

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