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?
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...
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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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