You are trying to invest $100,000 in a portfolio of stocks and bonds. You want the highest return possible but have a number of criteria to ensure diversification and risk management. The funds available for investment and their information are provided below. "Tech Sector" Expected Investment Bond Rating Year to Maturity Return 4 GE Bond AMD Stock Moscow Bond Apple Stock Pape Stock Tesla Inc. Stock Junk Inc. Bond BBB -- AAA -- -- D 10 -- 3 No Yes No Yes No Yes No 4.25% 14% 2.3% 7% 8.1% 6% 17% Assume you want no more than 50% of total investments in stocks and no more than 15% invested in bonds with a rating below "BBB". Additionally, assume you want some liquidity such that no more than 70% of your investments can be in bonds with greater than 5-years until maturity. Further, you want at least 40% of your total investments in the Tech Sector (stocks or bonds). In Excel, create an LP that maximizes expected return subjects to the investment constraints listed above. Make sure to label you objective function, constraints, and decision/choice variables.
You are trying to invest $100,000 in a portfolio of stocks and bonds. You want the highest return possible but have a number of criteria to ensure diversification and risk management. The funds available for investment and their information are provided below. "Tech Sector" Expected Investment Bond Rating Year to Maturity Return 4 GE Bond AMD Stock Moscow Bond Apple Stock Pape Stock Tesla Inc. Stock Junk Inc. Bond BBB -- AAA -- -- D 10 -- 3 No Yes No Yes No Yes No 4.25% 14% 2.3% 7% 8.1% 6% 17% Assume you want no more than 50% of total investments in stocks and no more than 15% invested in bonds with a rating below "BBB". Additionally, assume you want some liquidity such that no more than 70% of your investments can be in bonds with greater than 5-years until maturity. Further, you want at least 40% of your total investments in the Tech Sector (stocks or bonds). In Excel, create an LP that maximizes expected return subjects to the investment constraints listed above. Make sure to label you objective function, constraints, and decision/choice variables.
Foundations of Business - Standalone book (MindTap Course List)
4th Edition
ISBN:9781285193946
Author:William M. Pride, Robert J. Hughes, Jack R. Kapoor
Publisher:William M. Pride, Robert J. Hughes, Jack R. Kapoor
Chapter15: Using Management And Accounting Information
Section: Chapter Questions
Problem 5DQ
Related questions
Question
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 3 steps with 4 images
Recommended textbooks for you
Foundations of Business - Standalone book (MindTa…
Marketing
ISBN:
9781285193946
Author:
William M. Pride, Robert J. Hughes, Jack R. Kapoor
Publisher:
Cengage Learning
Foundations of Business (MindTap Course List)
Marketing
ISBN:
9781337386920
Author:
William M. Pride, Robert J. Hughes, Jack R. Kapoor
Publisher:
Cengage Learning
Foundations of Business - Standalone book (MindTa…
Marketing
ISBN:
9781285193946
Author:
William M. Pride, Robert J. Hughes, Jack R. Kapoor
Publisher:
Cengage Learning
Foundations of Business (MindTap Course List)
Marketing
ISBN:
9781337386920
Author:
William M. Pride, Robert J. Hughes, Jack R. Kapoor
Publisher:
Cengage Learning