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
3.34 Rating (157 Votes )
There are 3 Steps involved in it
Step: 1
Stock Number Industry Return Investment Total Retu...Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started