Practical Management Science
6th Edition
ISBN: 9781337406659
Author: WINSTON, Wayne L.
Publisher: Cengage,
expand_more
expand_more
format_list_bulleted
Concept explainers
Videos
Textbook Question
Chapter 7.7, Problem 38P
The stocks in Example 7.9 are all positively correlated. What happens when they are negatively correlated? Answer for each of the following scenarios. In each case, two of the three correlations are the negatives of their original values. Discuss the differences between the optimal portfolios in these three scenarios.
- a. Change the signs of the correlations between stocks 1 and 2 and between stocks 1 and 3. (Here, stock 1 tends to go in a different direction from stocks 2 and 3.)
- b. Change the signs of the correlations between stocks 1 and 2 and between stocks 2 and 3. (Here, stock 2 tends to go in a different direction from stocks 1 and 3.)
- c. Change the signs of the correlations between stocks 1 and 3 and between stocks 2 and 3. (Here, stock 3 tends to go in a different direction from stocks 1 and 2.)
EXAMPLE 7.9 PORTFOLIO SELECTION AT PERLMAN & BROTHERS
Perlman & Brothers, an investment company, intends to invest a given amount of money in three stocks. From past data, the means and standard deviations of annual returns have been estimated as shown in Table 7.2. The correlations among the annual returns on the stocks are listed in Table 7.3. The company wants to find a minimum-variance portfolio that yields a mean annual return of at least 0.12.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Analyse the impact of integrating EDI (Electronic Data Interchange) with API (Application
Programming Interface) on supply chain management, particularly focusing on how this
integration enhances information flow and operational efficiency. Consider the challenges that
might arise from this integration in terms of managing legacy systems alongside modern
applications.
1) View the video What is Operations Management (14.01 minutes, Ctrl+Click on the link); what are your key takeaways (tie to one or more of the topics discussed in Chapters 1 and/or 2) after watching this video. (https://www.viddler.com/embed/d01189e1)
Note: As a rough guideline, please try to keep the written submission to one or two paragraphs.
2) View the video What McDonald’s is serving up at its new CosMc’s Chain (3.42 mins, Ctrl+Click in the link), and answer the following questions: (https://www.youtube.com/watch?v=k7ojpUzE8q4)
i) From a strategic perspective, why do you think McDonald’s is opting for this new chain rather than trying to launch the new menu in its existing restaurants?
ii) What factors do you think in McDonald’s external and internal environments are driving its decision to open the CosMc’s locations?
iii) How do you think this format will improve McDonald’s profit margin as compared to its regular fast-food restaurants?
Note: As a…
Since the end of World War II, globalization has steadily increased with rapid expansion around the turn of the 21st century. What are some of the forces driving globalization and international business? What are some of the challenges of engaging in international business compared to doing business in your home country?
Chapter 7 Solutions
Practical Management Science
Ch. 7.3 - Prob. 1PCh. 7.3 - Prob. 2PCh. 7.3 - Pricing Decisions at Madison The Madison Company...Ch. 7.3 - Prob. 4PCh. 7.3 - Prob. 5PCh. 7.3 - Prob. 6PCh. 7.3 - Prob. 7PCh. 7.3 - Prob. 8PCh. 7.3 - Prob. 9PCh. 7.3 - Prob. 10P
Ch. 7.3 - Prob. 11PCh. 7.3 - Prob. 12PCh. 7.3 - Prob. 13PCh. 7.3 - PRICING SUITS AT SULLIVANS Sullivans is a retailer...Ch. 7.3 - Prob. 15PCh. 7.4 - Prob. 16PCh. 7.4 - Prob. 17PCh. 7.4 - Prob. 18PCh. 7.4 - Prob. 19PCh. 7.4 - Prob. 20PCh. 7.4 - Prob. 21PCh. 7.4 - Prob. 22PCh. 7.4 - Prob. 23PCh. 7.5 - Prob. 24PCh. 7.5 - Prob. 25PCh. 7.5 - Prob. 26PCh. 7.5 - Prob. 27PCh. 7.6 - Prob. 28PCh. 7.6 - Prob. 29PCh. 7.6 - Prob. 30PCh. 7.6 - Prob. 31PCh. 7.6 - Prob. 32PCh. 7.6 - Prob. 33PCh. 7.6 - The method for rating teams in Example 7.8 is...Ch. 7.7 - Prob. 35PCh. 7.7 - Prob. 36PCh. 7.7 - Prob. 37PCh. 7.7 - The stocks in Example 7.9 are all positively...Ch. 7.7 - Prob. 39PCh. 7.7 - Prob. 40PCh. 7.7 - Prob. 41PCh. 7.7 - Prob. 42PCh. 7.8 - Given the data in the file Stock Beta.xlsx,...Ch. 7.8 - Prob. 44PCh. 7 - Prob. 45PCh. 7 - Prob. 46PCh. 7 - Another way to derive a demand function is to...Ch. 7 - Prob. 48PCh. 7 - If a monopolist produces q units, she can charge...Ch. 7 - Prob. 50PCh. 7 - Prob. 51PCh. 7 - Prob. 52PCh. 7 - Prob. 53PCh. 7 - Prob. 54PCh. 7 - Prob. 55PCh. 7 - Prob. 56PCh. 7 - A beer company has divided Bloomington into two...Ch. 7 - Prob. 58PCh. 7 - Prob. 59PCh. 7 - Prob. 60PCh. 7 - Prob. 61PCh. 7 - Prob. 62PCh. 7 - Prob. 63PCh. 7 - You have 50,000 to invest in three stocks. Let Ri...Ch. 7 - Prob. 65PCh. 7 - Prob. 66PCh. 7 - Prob. 67PCh. 7 - Prob. 68PCh. 7 - Prob. 69PCh. 7 - Prob. 70PCh. 7 - Based on Grossman and Hart (1983). A salesperson...Ch. 7 - Prob. 73PCh. 7 - Prob. 74PCh. 7 - Prob. 75PCh. 7 - Prob. 76PCh. 7 - Prob. 77PCh. 7 - Prob. 78PCh. 7 - Prob. 79PCh. 7 - Prob. 80PCh. 7 - Prob. 81PCh. 7 - Prob. 82PCh. 7 - Prob. 83PCh. 7 - Prob. 84PCh. 7 - Prob. 85PCh. 7 - Prob. 86PCh. 7 - Prob. 1.1CCh. 7 - Prob. 1.2CCh. 7 - Prob. 1.3CCh. 7 - Prob. 1.4C
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, operations-management and related others by exploring similar questions and additional content below.Similar questions
- PS.53 Brother I.D. Ricks is a faculty member at BYU-Idaho whose grandchildren live in Oklahoma and California. He and his wife would like to visit their grandchildren at least once a year in these states. They currently have one vehicle with well over 100,000 miles on it, so they want to buy a newer vehicle with fewer miles and that gets better gas mileage. They are considering two options: (1) a new subcompact car that would cost $18,750 to purchase or (2) a used sedan that would cost $12,750.They anticipate that the new subcompact would get 37 miles per gallon (combined highway and around town driving) while the sedan would get 26 miles per gallon. Based on their road tripping history they expect to drive 13,000 miles per year. For the purposes of their analysis they are assuming that gas will cost $2.93 per gallon.Question: How many miles would the Ricks need to drive before the cost of these two options would be the same? (Display your answer to the nearest whole number.) (Hint:…arrow_forwardChoose one major approach to job design, and then discuss how best that approach can be utilized in either your current or previous employer, including a discussion of its strengths and weaknesses.arrow_forwardThe results of your four plans will provide an indicative EOQ value. State this value and discuss in a precise manner, why it is not the exact, true value. Additional calculations in the form of plans E, F etc. may also assist your explanation of the EOQ and can be includedarrow_forward
- i). Complete the table assuming a Level production plan. ii) Comment on your results and explain whether at this stage, you consider a Level plan is a suitable approach for this particular business. Your comment should include reference to a calculated ‘fill rate’.arrow_forwardIn the following sawtooth inventory profile diagram, two inventory plans with different order quantities (Q) and different frequencies of delivery are shown; order quantity for Plan A = 200 units and Plan B = 50 units. i). Total demand (D) is 350 units, the holding cost per unit (Ch) is equal to (£0.8) and the ordering cost per order (Co) is (£12.5). Calculate the total costs for each plan and state which one is more preferable along with the reason why. ii). There is a stark difference in the composition of the total costs of Plans A and B. Explain this difference and why it occurs. Use the breakdown of costs for each plan to help illustrate your answer.arrow_forwardi). Complete the table for a Chase production plan. ii). Explain whether a Level or Chase plan is more suitable for the demand pattern experienced by this particular business, which incidentally relies on highly skilled workers in the production process. Assume a starting workforce of 7 and that fractional workers are permissible. You should support your answer with numerical data derived from Table 3. In comparing the costs, state any other assumptions made.arrow_forward
- i). Complete for a Chase production plan. ii). Explain whether a Level or Chase plan is more suitable for the demand pattern experienced by this particular business, which incidentally relies on highly skilled workers in the production process. Assume a starting workforce of 7 and that fractional workers are permissible.arrow_forwardComplete the table for a Chase production plan.arrow_forwardHow much can the garden centre expect to sell during each quarter of next year (Year 3) accounting for seasonality? Your forecast must make use of seasonal indices. All workings must be shown in full. (NOTE: Please round your calculations to three decimal places).arrow_forward
- PS.53 Brother I.D. Ricks is a faculty member at BYU-Idaho whose grandchildren live in Oklahoma and California. He and his wife would like to visit their grandchildren at least once a year in these states. They currently have one vehicle with well over 100,000 miles on it, so they want to buy a newer vehicle with fewer miles and that gets better gas mileage. They are considering two options: (1) a new subcompact car that would cost $18,750 to purchase or (2) a used sedan that would cost $12,750.They anticipate that the new subcompact would get 37 miles per gallon (combined highway and around town driving) while the sedan would get 26 miles per gallon. Based on their road tripping history they expect to drive 13,000 miles per year. For the purposes of their analysis they are assuming that gas will cost $2.93 per gallon.Question: How many miles would the Ricks need to drive before the cost of these two options would be the same? (Display your answer to the nearest whole number.) (Hint:…arrow_forwardTisjTzktxyduduarrow_forwardNot use ai pleasearrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Practical Management ScienceOperations ManagementISBN:9781337406659Author:WINSTON, Wayne L.Publisher:Cengage,
Practical Management Science
Operations Management
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:Cengage,
Single Exponential Smoothing & Weighted Moving Average Time Series Forecasting; Author: Matt Macarty;https://www.youtube.com/watch?v=IjETktmL4Kg;License: Standard YouTube License, CC-BY
Introduction to Forecasting - with Examples; Author: Dr. Bharatendra Rai;https://www.youtube.com/watch?v=98K7AG32qv8;License: Standard Youtube License