ane is ready to invest $200,000 in stocks and her financial consultant provided six different alternatives. The rates of return and industrial sectors for each stock is given in the following table: Stock Industry Annual Return 1 Airlines 0.1824 2 Airlines 0.2875 4 Banking 0.2012 5 Banking 0.1400 7 Agriculture 0.2367 8 Agriculture 0.1825 The decision will be based on the following constraints: Each stock can have a maximum investment of $40,000. The total amount invested in Banking must be at least as much as the amount invested in Agriculture. For the Banking sector, the maximum number of stocks chosen must be one. What is the optimal maximum return?
ane is ready to invest $200,000 in stocks and her financial consultant provided six different alternatives. The rates of return and industrial sectors for each stock is given in the following table: Stock Industry Annual Return 1 Airlines 0.1824 2 Airlines 0.2875 4 Banking 0.2012 5 Banking 0.1400 7 Agriculture 0.2367 8 Agriculture 0.1825 The decision will be based on the following constraints: Each stock can have a maximum investment of $40,000. The total amount invested in Banking must be at least as much as the amount invested in Agriculture. For the Banking sector, the maximum number of stocks chosen must be one. What is the optimal maximum return?
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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Jane is ready to invest $200,000 in stocks and her financial consultant provided six different alternatives. The
| Stock | Industry | Annual Return |
| 1 | Airlines | 0.1824 |
| 2 | Airlines | 0.2875 |
| 4 | Banking | 0.2012 |
| 5 | Banking | 0.1400 |
| 7 | Agriculture | 0.2367 |
| 8 | Agriculture | 0.1825 |
The decision will be based on the following constraints:
Each stock can have a maximum investment of $40,000.
The total amount invested in Banking must be at least as much as the amount invested in Agriculture.
For the Banking sector, the maximum number of stocks chosen must be one.
What is the optimal maximum return?
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