Daniel Grady is the financial advisor for a number of professional athletes. An analysis of the long-term goals for many of these athletes has resulted in a recommendation to purchase stocks with some of the income that they have set aside for investments. Five stocks have been identified as hav- ing very favorable expectations for future performance. Although the expected return is important in these investments, the risk, as measured by the beta of the stock, is also important. (A high value of beta indicates that the stock has a relatively high risk.) The expected return and the beta for five stocks are as follows: Stock 1 2 3 4 5 Expected Return (%) 11.0 9.0 6.5 15.0 13.0 Beta 1.20 0.85 0.55 1.40 1.25 Daniel would like to minimize the beta of the stock portfolio (calculated using a weighted average of the amounts put into the different stocks) while maintaining an expected return of at least 11%. Since future conditions may change, Daniel has decided that no more than 35% of the portfolio should be invested in any one stock. (a) Formulate this as a linear program. (Hint: Define each variables as the proportion of the total investment that would be put in that stock. Include a constraint that restricts the sum of these vari- ables to be 1.) (b) Solve this problem. What are the expected return and beta for this portfolio?
Critical Path Method
The critical path is the longest succession of tasks that has to be successfully completed to conclude a project entirely. The tasks involved in the sequence are called critical activities, as any task getting delayed will result in the whole project getting delayed. To determine the time duration of a project, the critical path has to be identified. The critical path method or CPM is used by project managers to evaluate the least amount of time required to finish each task with the least amount of delay.
Cost Analysis
The entire idea of cost of production or definition of production cost is applied corresponding or we can say that it is related to investment or money cost. Money cost or investment refers to any money expenditure which the firm or supplier or producer undertakes in purchasing or hiring factor of production or factor services.
Inventory Management
Inventory management is the process or system of handling all the goods that an organization owns. In simpler terms, inventory management deals with how a company orders, stores, and uses its goods.
Project Management
Project Management is all about management and optimum utilization of the resources in the best possible manner to develop the software as per the requirement of the client. Here the Project refers to the development of software to meet the end objective of the client by providing the required product or service within a specified Period of time and ensuring high quality. This can be done by managing all the available resources. In short, it can be defined as an application of knowledge, skills, tools, and techniques to meet the objective of the Project. It is the duty of a Project Manager to achieve the objective of the Project as per the specifications given by the client.
Daniel Grady is the
financial advisor for a number of professional athletes.
An analysis of the long-term goals for many of these
athletes has resulted in a recommendation to purchase
stocks with some of the income that they have set aside
for investments. Five stocks have been identified as hav-
ing very favorable expectations for future performance.
Although the expected return is important in these
investments, the risk, as measured by the beta of the
stock, is also important. (A high value of beta indicates
that the stock has a relatively high risk.) The expected
return and the beta for five stocks are as follows:
| Stock | 1 | 2 | 3 | 4 | 5 |
| Expected Return (%) | 11.0 | 9.0 | 6.5 | 15.0 | 13.0 |
| Beta | 1.20 | 0.85 | 0.55 | 1.40 | 1.25 |
Daniel would like to minimize the beta of the stock
portfolio (calculated using a weighted average of
the amounts put into the different stocks) while
maintaining an expected return of at least 11%.
Since future conditions may change, Daniel has
decided that no more than 35% of the portfolio
should be invested in any one stock.
(a) Formulate this as a linear program. (Hint: Define
each variables as the proportion of the total
investment that would be put in that stock. Include
a constraint that restricts the sum of these vari-
ables to be 1.)
(b) Solve this problem. What are the expected return
and beta for this portfolio?
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