Use python please You are the manager of a £100 million portfolio, and you have 6 investment options: - First Mortgages: return 9% and risk score 3 - Second Mortgages: return 12% and risk score 6 - Personal Loans: return 15% and risk score 8 - Commercial Loans: return 8% and risk score 2 - Government Securities: return 6% and risk score 1 - Saving Account: return 3% and risk score 0 The current regulation requires that the amount allocated in second mortgages and personal loans (combined) should not exceed the amount allocated in first mortages. Given this information: a) Ignoring the risk involved in the different investment options, what is the profit maximizing allocation of resources? What are the expected profits?  b) Now, you have to consider the risk associated with the investments. The average risk of your portfolio cannot exceed 5. What is the profit maximizing allocation of resources? What are the expected profits?  The average risk is computed as follows: Av=rixi/xi where: xi is the amount allocated in the investment option i and ri is the risk score of investment option i.

Programming Logic & Design Comprehensive
9th Edition
ISBN:9781337669405
Author:FARRELL
Publisher:FARRELL
Chapter4: Making Decisions
Section: Chapter Questions
Problem 6PE
icon
Related questions
Question

Use python please

You are the manager of a £100 million portfolio, and you have 6 investment options:

- First Mortgages: return 9% and risk score 3
- Second Mortgages: return 12% and risk score 6
- Personal Loans: return 15% and risk score 8
- Commercial Loans: return 8% and risk score 2
- Government Securities: return 6% and risk score 1
- Saving Account: return 3% and risk score 0

The current regulation requires that the amount allocated in second mortgages and personal loans (combined) should not exceed the amount allocated in first mortages.

Given this information:

a) Ignoring the risk involved in the different investment options, what is the profit maximizing allocation of resources? What are the expected profits? 

b) Now, you have to consider the risk associated with the investments. The average risk of your portfolio cannot exceed

5. What is the profit maximizing allocation of resources? What are the expected profits?

 The average risk is computed as follows:
Av=rixi/xi where: xi is the amount allocated in the investment option i and ri is the risk score of investment option i.
 

Expert Solution
steps

Step by step

Solved in 4 steps with 4 images

Blurred answer
Knowledge Booster
Payback period
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, computer-science and related others by exploring similar questions and additional content below.
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
Programming Logic & Design Comprehensive
Programming Logic & Design Comprehensive
Computer Science
ISBN:
9781337669405
Author:
FARRELL
Publisher:
Cengage