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A trust officer for the Humber City Bank wants to invest in the following bonds: Bond Risk Tax-Free Yes 21 A Maturity Long Short Long
A trust officer for the Humber City Bank wants to invest in the following bonds: Bond Risk Tax-Free Yes 21 A Maturity Long Short Long 22 B Yield 5 % 11 % 4% 12 % 8 % No C3 High Low High Low High No 24 D Short No 25 E Short Yes . She is going to use linear programming to find the dollar investment in each bond that will maximize total interest income. The following investment guidelines are stipulated: Exactly $160,000 will be invested altogether. At most 25 % of the investment should be placed in short maturity bonds. No more than 40 % of the investment should be placed in high-risk issues. At least $90,000 must be placed in tax-free issues. Total funds invested in low-risk bonds must be less than or equal to 50 % of the total funds placed in long-maturity issues. 1 The interest income derived from tax-free bonds must be at least of the total income. (a) The objective function for this problem is: O minimize Z = 0.0521 + 0.1122 +0.04x3 + 0.1234 + 0.0825 O maximize Z = 0.05x1 + 0.1122 +0.04x3 + 0.12.04 + 0.08x5 O minimize Z = 5x1 + 1122 + 4.63 + 1204 + 825 O maximize Z = 0.05x1 + 0.1122 +0.04x3 + 0.1234 + 0.80x5 None of the above. (b) Please choose the correct constraint: 21 + 32 +33 + 24 + 35 160,000 O None of the above. (c) Please choose the correct constraint: 22 + 24 + 25 64,000 O21 +33 + 25 = 64,000 O x1 +33 + 25 + 64, 000 O21 +33 + 25 90,000 33 + 25 > 90,000 O 34 + 05 > 90,000 O x2 + 25 > 90,000 O None of the above. (f) Please choose the correct constraint in the standard form: 21 - 2.02 + 23 - 224 0 O 21+ 2.02 + 23 +2.04 > 0 O None of the above. (g) Please choose the correct constraint in the standard form: 0.1521 0.1122 - 0.04.23 - 0.1224 + 0.24x5 = 0 0.1501 -0.1122 - 0.0403 0.1204 + 0.24x5 0 0.1521 0.1122 - 0.04.23 - 0.12.04 + 0.24x7 > 0 O None of the above. (h) Non-negativity for this LP problem means that: O all x; > 0, 1 = 1, 2, 3, 4, 5 21 X 22 X 23 X 34 X 25 > 0 at least one ; > 0 Ox1 + 22 + x3 + x4 + 25 > 0 None of the above
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