Investment

Investors must make decisions about how much money to invest in various products. Their tolerance for risk as well as the return rates and minimum investment requirements comes into play in this decision making process. Oftentimes, the situation can be described as a linear programming problem, where the objective function is the return on investment. Answer the questions below to help the investor.

1. An investor has $120,000 to invest in bonds. Bond A yields an average of 5% and the bond B yields 8.3%. The investor requires that at least 3 times as much money be invested in bond A as in bond B. You must invest in these bonds to maximize his returnR. This can be set up as a linear programming problem. Introduce the decision variables:

x= dollars invested in bond A y= dollars invested in bond B

Find the objective function R.

Group of answer choices

A. R=0.050.083xy+120000

B. R=0.083x+0.05y

C. R=0.05x+0.083y

D. R=120000(0.05x)+12000(0.083y)

3. Investor Matt has $83,000 to invest in a CD and a mutual fund. The CD yields 4% and the mutual fund yields an average of 8.5%. The mutual fund requires a minimum investment of $10,000, and Matt requires that at least 2 times as much money be invested in the CD as in the mutual fund. You must invest in these bonds to maximize his return.

This can be set up as a linear programming problem. Introduce the decision variables:

x= dollars invested in the CD y= dollars invested in the mutual fund

Check all of the problem constraints. Note: The non-negative constraints are not included here.

Group of answer choices

• x2y
• 0.04x+0.085y10000
• 0.04x+0.085y83000
• x10000
• y2x
• y10000
• y10000
• x+y83000
• x+y10000

4. Investor Matt has $351,000 to invest in bonds. Bond A yields an average of 6.7% and the bond B yields 5.8%. Matt requires that at least 4 times as much money be invested in bond A as in bond B. You must invest in these bonds to maximize his return. What is the maximum return?

$ per year. Round to the nearest cent.