Question
Andrew is ready to invest $200,000 in stock and has been provided nine different alternatives by his financial consultant. The following stocks belong to three
Andrew is ready to invest $200,000 in stock and has been provided nine different alternatives by his financial consultant. The following stocks belong to three different industrial sectors and each sector has three varieties of stocks each with different expected rate of return. The average rate of return taken for the past ten years is provided with each of nine stocks.
1 | Airlines | 18.24% |
2 | Airlines | 28.75% |
3 | Airlines | 11.08% |
4 | Banking | 20.12% |
5 | Banking | 14.00% |
6 | Banking | 26.17% |
7 | Agriculture | 23.67% |
8 | Agriculture | 18.25% |
9 | Agriculture | 16.50% |
The decision will be based on the constraints provided below: -exactly 5 alternatives should be chosed
-One stock can have a maximum investment of at least $55,000
-Any stock chosen must have a minimum investment of at least $25,000
-For the Airlines sector, the maximum number of stocks chosen should be two
.-the total amount invested in Banking must be at least as much as the amount invested in Agriculture.
Formulate, but do not solve, a model that will decide Andrew's investment strategy to maximize his expected annual return.
Step by Step Solution
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Step: 1
To formulate a model for Andrews investment strategy we will create a Linear Programming LP problem ...Get Instant Access to Expert-Tailored Solutions
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Step: 2
Step: 3
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