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Investment Planning . An investment firm has $1,000,000 to invest over a period of six years. The money can be invested in the following: stocks,
Investment Planning . An investment firm has $1,000,000 to invest over a period of six years. The money can be invested in the following: stocks, bonds, certificates and real estate. Stocks are available every year for the six years but must be held for two years. Stocks yield $1.20 for each $1.00 invested, after the two years. Bonds are available each year for the six years but must be held for three years. Bonds yield $1.40 for every $1.00 invested, after the three years. Certificates are only available at the start of the second year and must be held for four years. Certificates yield $ 1.80 for every $1.00 invested, after the four years. Real estate is available only at the beginning of the fifth and sixth years and must be held for one year. Each $1.00 invested yields $1.10 one year later. Question: Find the optimum investment mix to maximize returns at the end of the sixth year. Hint: Draw the diagram showing investment possibilities over the period of six years. Investment Planning . An investment firm has $1,000,000 to invest over a period of six years. The money can be invested in the following: stocks, bonds, certificates and real estate. Stocks are available every year for the six years but must be held for two years. Stocks yield $1.20 for each $1.00 invested, after the two years. Bonds are available each year for the six years but must be held for three years. Bonds yield $1.40 for every $1.00 invested, after the three years. Certificates are only available at the start of the second year and must be held for four years. Certificates yield $ 1.80 for every $1.00 invested, after the four years. Real estate is available only at the beginning of the fifth and sixth years and must be held for one year. Each $1.00 invested yields $1.10 one year later. Question: Find the optimum investment mix to maximize returns at the end of the sixth year. Hint: Draw the diagram showing investment possibilities over the period of six years
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