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?

Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Eugene F. Brigham, Phillip R. Daves
Chapter8: Basic Stock Valuation
Section: Chapter Questions
Problem 2Q: Two investors are evaluating General Electric’s stock for possible purchase. They agree on the...
icon
Related questions
Question

Jane 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?

 
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 2 steps

Blurred answer
Knowledge Booster
Investment in Stocks
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
Intermediate Financial Management (MindTap Course…
Intermediate Financial Management (MindTap Course…
Finance
ISBN:
9781337395083
Author:
Eugene F. Brigham, Phillip R. Daves
Publisher:
Cengage Learning
SWFT Comprehensive Volume 2019
SWFT Comprehensive Volume 2019
Accounting
ISBN:
9780357233306
Author:
Maloney
Publisher:
Cengage
Pfin (with Mindtap, 1 Term Printed Access Card) (…
Pfin (with Mindtap, 1 Term Printed Access Card) (…
Finance
ISBN:
9780357033609
Author:
Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk
Publisher:
Cengage Learning
SWFT Individual Income Taxes
SWFT Individual Income Taxes
Accounting
ISBN:
9780357391365
Author:
YOUNG
Publisher:
Cengage
SWFT Essntl Tax Individ/Bus Entities 2020
SWFT Essntl Tax Individ/Bus Entities 2020
Accounting
ISBN:
9780357391266
Author:
Nellen
Publisher:
Cengage
SWFT Comprehensive Vol 2020
SWFT Comprehensive Vol 2020
Accounting
ISBN:
9780357391723
Author:
Maloney
Publisher:
Cengage