8-2 (Investment decision problem) The Heinlein and Krampf Brokerage firm has just been instructed by one of its clients to invest $250,000 of her money obtained recently through the sale of land holdings in Ohio. The client has a good deal of trust in the investment house, but she also has her own ideas about the distribution of the funds being invested. In particular, she requests that the firm select whatever stocks and bonds they believe are well rated but within the following guidelines: Municipal bonds should constitute at least 20% of the investment. At least 40% of the funds should be placed in a combination of electronic firms, aerospace firms, and drug manufacturers. No more than 50% of the amount invested in municipal bonds should be placed in a high-risk, high-yield nursing home stock. Use Solver to solve the problem. You need to have one Excel sheet with the problem setup and another sheet with Solver solution subject to these restraints, the client’s goal is to maximize projected return on investments. The analysts at Heinlein and Krampf, aware of these guidelines, prepare a list of high-quality stocks and bonds and their corresponding rates of return: Formulate this portfolio selection problem using LP. Solve this problem. Use Solver to solve the problem. You need to have one Excel sheet with the problem setup and another sheet with Solver solution

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter7: Nonlinear Optimization Models

Section7.4: Advertising Response And Selection Models

Problem 23P

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8-2 (Investment decision problem) The Heinlein and Krampf Brokerage firm has just been instructed by one of its clients to invest $250,000 of her money obtained recently through the sale of land holdings in Ohio. The client has a good deal of trust in the investment house, but she also has her own ideas about the distribution of the funds being invested. In particular, she requests that the firm select whatever stocks and bonds they believe are well rated but within the following guidelines:

- Municipal bonds should constitute at least 20% of the investment.
- At least 40% of the funds should be placed in a combination of electronic firms, aerospace firms, and drug manufacturers.
- No more than 50% of the amount invested in municipal bonds should be placed in a high-risk, high-yield nursing home stock.

Use Solver to solve the problem. You need to have one Excel sheet with the problem setup and another sheet with Solver solution

subject to these restraints, the client’s goal is to maximize projected return on investments. The analysts at Heinlein and Krampf, aware of these guidelines, prepare a list of high-quality stocks and bonds and their corresponding rates of return: Formulate this portfolio selection problem using LP. Solve this problem.
Use Solver to solve the problem. You need to have one Excel sheet with the problem setup and another sheet with Solver solution

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