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Case Narrative: As a young investor with a moderate risk attitude, you consulted a financial adviser regarding your interest to invest in the equities market. You informed the adviser about the intent to invest a maximum of PHP 650,000 in the stock

Case Narrative: As a young investor with a moderate risk attitude, you consulted a financial adviser regarding your interest to invest in the equities market. You informed the adviser about the intent to invest a maximum of PHP 650,000 in the stock

Foundations of Business - Standalone book (MindTap Course List)
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
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We are currently learning about Linear Programming in Management Science. I need help with this case. Answer should include: Decision Variables, Objective Function, and Constraints (including non-negativity constraints if necessary). All in Mathematical Expressions. Thank you!
Case Narrative: As a young investor with a moderate risk attitude, you consulted a financial adviser regarding your interest to invest in the equities market. You informed the adviser about the intent to invest a maximum of PHP 650,000 in the stock market however you are unsure which listed companies to invest in. At your request, your financial adviser identified two listed companies where you may reap significant financial returns (i.e., profit) because these companies are likely candidates for a takeover in the near future. One of the companies, DIKOM, is a leading manufacturer of innovative storage battery systems used in the vehicle manufacturing industry, while REIT Corporation is a joint venture firm that operates real estate properties in Quezon City, Metro Manila. DIKOM is currently trading at PHP30 per share while REIT Corporation is currently trading at PHP65 per share. If the takeovers occur at the end of six months, the financial adviser estimates that the price of DIKOM will reach PHP38 per share while REIT will reach PHP90 per share. Based on the financial adviser's analysis, REIT Corporation was identified as the higher-risk firm. You have agreed to invest in the two companies identified by your adviser. Your financial adviser informed you that a minimum of 10,000 shares is required to invest in DIKOM while a minimum of 3,000 shares is required to invest in REIT. Based on your financial adviser's analysis, he/she recommended that your investment in REIT should not exceed PHP 351,000 because of its higher risk. Task: Formulate the objective function and constraints. Define the Z function's variables properly.
Transcribed Image Text:Case Narrative: As a young investor with a moderate risk attitude, you consulted a financial adviser regarding your interest to invest in the equities market. You informed the adviser about the intent to invest a maximum of PHP 650,000 in the stock market however you are unsure which listed companies to invest in. At your request, your financial adviser identified two listed companies where you may reap significant financial returns (i.e., profit) because these companies are likely candidates for a takeover in the near future. One of the companies, DIKOM, is a leading manufacturer of innovative storage battery systems used in the vehicle manufacturing industry, while REIT Corporation is a joint venture firm that operates real estate properties in Quezon City, Metro Manila. DIKOM is currently trading at PHP30 per share while REIT Corporation is currently trading at PHP65 per share. If the takeovers occur at the end of six months, the financial adviser estimates that the price of DIKOM will reach PHP38 per share while REIT will reach PHP90 per share. Based on the financial adviser's analysis, REIT Corporation was identified as the higher-risk firm. You have agreed to invest in the two companies identified by your adviser. Your financial adviser informed you that a minimum of 10,000 shares is required to invest in DIKOM while a minimum of 3,000 shares is required to invest in REIT. Based on your financial adviser's analysis, he/she recommended that your investment in REIT should not exceed PHP 351,000 because of its higher risk. Task: Formulate the objective function and constraints. Define the Z function's variables properly.
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