Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

If you are answering to the post please answer all questions. Thank you so much! A winner of the Texas Lotto has decided to invest

image text in transcribed

If you are answering to the post please answer all questions. Thank you so much!

A winner of the Texas Lotto has decided to invest exist50,000per year in the stock market. Under consideration are stocks for a petrochemical firm and a public utility. Although along-range goal is to get the highest possible return, some consideration is given to the risk involved with the stocks. A risk index on a scale of 1-10 (with 10 being the most risky) is assigned to each of the two stocks. The total risk of the portfolio is found by multiplying the risk of each stock by the dollars invested in that stock. The attached table provides a summary of the return and risk. The investor would like to maximize the return on the investment, but the average risk index of the investment should not be higher than 6. The optimal dollar amount invested in Petrochemical stock is _________ dollars, and the optimal dollar amount invested in Utility stock is __________ dollars. (Please only enter an integer and include no units. When you use Excel QM, you need to end the total risk in the right hand side of the constraint not simply the risk index.) 20,000, 30,000 30,000, 20,000 10,000, 15,000 15,000, 10,000 Mark for Review What's This? The average risk index (not in dollar amount) for the optimal investment is ____________, and the estimated best/maximum return for this investment is _____________. (Please only enter an integer and include no units.) Mark for Review Whats This

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Capital Markets Institutions And Instruments

Authors: Frank J. Fabozzi, Franco Modigliani

2nd Edition

0133001873, 978133001877

More Books

Students also viewed these Finance questions

Question

1. How can evolutionary theory explain prosocial behaviour?

Answered: 1 week ago