use graphical method Eh Di Uhaw, Inc. is a company interested in investing money in stocks of companies producing drinks. The management of thecompany speculates on investing Php 2,000,000 in four available shares. To prevent a high risk index there is a necessity ofinvesting some amount of money in government bonds. From a long-term survey of the financial market following annual rates ofreturn and risk indices are projected:Rate of returnRisk indexSan Miguel Corporation12 %0.07Tanduay Distillers, Inc.9 %0.09Emperador Distillers, Inc.15 %0.05Pepsi Cola Products Philippines, Inc.7 %0.03Government bonds6 %0.01At the board meeting, these restrictions have been approved:• No more than Php 200,000 might be invested in Pepsi Cola Products Philippines, Inc. shares.• Government bonds should cover at least 20% of all investments.• Because of diversification of portfolio, none of the alcoholic drinks companies should receive more than Php 800,000.• Risk index of the final portfolio should be 0.05 at mostHow should the board of directors of Eh Di Uhaw, Inc. distribute the Php 2,000,000 into the four available shares to generate thehighest return, while satisfying the constraints laid down in the board meeting?

Risk aversion is a phrase employed to characterize an individual's inclination toward assured…

Eh Di Uhaw, Inc. is a company interested in investing money in stocks of companies producing drinks. The management of the company speculates on investing Php 2,000,000 in four available shares. To prevent a high risk index there is a necessity of investing some amount of money in government bonds. From a long-term survey of the financial market following annual rates of return and risk indices are projected: San Miguel Corporation Tanduay Distillers, Inc. Emperador Distillers, Inc. Pepsi Cola Products Philippines, Inc. Government bonds Rate of return 12% 9% 15% 7% 6% Risk index 0.07 0.09 0.05 0.03 0.01 At the board meeting, these restrictions have been approved: • No more than Php 200,000 might be invested in Pepsi Cola Products Philippines, Inc. shares. . Government bonds should cover at least 20% of all investments. • Because of diversification of portfolio, none of the alcoholic drinks companies should receive more than Php 800,000. • Risk index of the final portfolio should be 0.05 at most How should the board of directors of Eh Di Uhaw, Inc. distribute the Php 2,000,000 into the four available shares to generate the highest return, while satisfying the constraints laid down in the board meeting?

Eh Di Uhaw, Inc. is a company interested in investing money in stocks of companies producing drinks. The management of the company speculates on investing Php 2,000,000 in four available shares. To prevent a high risk index there is a necessity of investing some amount of money in government bonds. From a long-term survey of the financial market following annual rates of return and risk indices are projected: San Miguel Corporation Tanduay Distillers, Inc. Emperador Distillers, Inc. Pepsi Cola Products Philippines, Inc. Government bonds Rate of return 12% 9% 15% 7% 6% Risk index 0.07 0.09 0.05 0.03 0.01 At the board meeting, these restrictions have been approved: • No more than Php 200,000 might be invested in Pepsi Cola Products Philippines, Inc. shares. . Government bonds should cover at least 20% of all investments. • Because of diversification of portfolio, none of the alcoholic drinks companies should receive more than Php 800,000. • Risk index of the final portfolio should be 0.05 at most How should the board of directors of Eh Di Uhaw, Inc. distribute the Php 2,000,000 into the four available shares to generate the highest return, while satisfying the constraints laid down in the board meeting?

Financial Reporting, Financial Statement Analysis and Valuation

8th Edition

ISBN:9781285190907

Author:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Publisher:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Chapter11: Risk-adjusted Expected Rates Of Return And The Dividends Valuation Approach

Section: Chapter Questions

Problem 11PC: Whirlpool manufactures and sells home appliances under various brand names. IBM develops and...

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