Question
An Investment Problem A portfolio manager has $100K to invest, in three kinds of securities: (a) a utilities stock paying 8% dividend, (b) a software
An Investment Problem A portfolio manager has
$100K
to invest, in three kinds of securities: (a) a utilities stock paying
8%
dividend, (b) a software stock paying 3% dividend, (c) a bond paying 5% interest. Not all of the amount need to be invested. Further, there are the following restrictions. Amount invested in bonds need to be at least two times the amount invested in stocks. At least
$30K
need to be invested in bonds, and no more than
$60K
can be in the utilities stock. What investment policy must be pursued to maximize the return?\ (a) Set up the problem as an LP. Clearly define decision variables.
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