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Decision 2 : Financial - Assets Investment Richelieu Specialty Paints has been quite successful and has $ 1 , 5 0 0 , 0 0
Decision : Financial Assets Investment
Richelieu Specialty Paints has been quite successful and has $ cash to be invested. Amanda and her management team have developed four potential investments in addition to leaving the cash in a low interest deposit. The four new opportunities are:
Purchase some shares of a major supplier risk of total loss, potential return
Invest in the research and development of a new product risk of total loss, potential
return
Buy a selection of corporate bonds risk of total loss, potential return
Buy a selection of government bonds risk of total loss, potential return
Leaving the money in a low interest deposit is virtually riskless and has a potential return.
Richelieus father had provided Amanda with some guidelines for investment, aimed at diversification and risk management. These are:
Invest a maximum of of the total cash in any one of the four new opportunities to ensure some risk control.
Invest at least $ in each of the four new opportunities to ensure some diversity.
Limit the total potential loss, on average, to $ based on the risk factors indicated.
Ensure the highest return possible.
Recommend the appropriate mix of the four investments and note how much money, if any, should be leftinthelowinterestdeposit. Also,howwouldthismixchange,andwhatwouldhappentopotential return, if Amanda decided to take a more conservative approach and limit the total potential loss to $
It's supposed to equal to Total Earnings: With limited loss:
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