Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

its okay thank i was able to solve it already Sign in - Macy's Handshak Velor's Secret Camp Investment Advisors, Inc., is a brokerage firm

image text in transcribed
image text in transcribed
its okay thank i was able to solve it already
Sign in - Macy's Handshak Velor's Secret Camp Investment Advisors, Inc., is a brokerage firm that manages stock portfolios for a number of clients. A particular portfolio consists of shares of U.S. of and shares of Huber Steel. The annual return for U.S. Olis 33 per share and the annual return for Haber Steel 55 per share. US. O sells for $25 per share and Huber Steelsels for $50 per share. The portfolio has $10,000 to be invested. The portfolio risk index (0.50 per share of U.S. oland 0.25 per share for Huber Steel) has a maximum of 700. In addition, the portfolio is limited to a maximum of 1,000 shares of U.S.O. The linear programming formulation that will make the total anual return of the portfolio is as follows Max JUS Maximize total annual return St. 250 SON 30,000 Funds available 0.SOU + 0.25H 700 Risk mamm TU 51,000 U.S. O maximum UH 20 The computer output is shown below Optective Value 100.00000 VAFIA Va MOD.00000 1200.00000 Hd 0.00000 0.000 HI Contrat NAV LED 0.00000 0.000 200.000 0.00000 Varia Aline 06 Cutitet 3.0000 1.00000 1.00000 TODO ALLA Deere O doo SODDO Contraint Abi NE VA Inc 1000000000 0.000 11000. dodou 700.00000 15:00 300..10000 100000000 It 200.000 (a) What is the optimal solution, and what is the value of the total annual return on ) H estimated annual return U Handshake Victoria's Secret A. Campuswire (b) Which constraints are binding? What is your interpretation of these constraints in terms of the problem? (Select all that apply.) Constraint 1. All funds available are being utilized Constraint 2. The maximum permissible risk is being incurred. Constraint 3. All available shares of U.S. Oil are being purchased. None of the constraints are binding (c) What are the dual values for the constraints? Interpret each. (Round your answers to two decimal places.) constraint 1 O Constraint 1 has a dual value of 5. If an additional dollar is added to the available funds, the total annual return is predicted to increase by $5. Constraint 1 has a dual value of 3. If an additional dollar is added to the available funds, the total annual return is predicted to increase by $3. Constraint 1 has a dual value of 1.33. If an additional dollar is added to the available funds, the total annual return is predicted to increase by $1.33. Constraint 1 has a slack of $200. Additional dollars added to the available funds will not improve the total annual return. Constraint 1 has a dual value of 0.09. If an additional dollar is added to the available funds, the total annual return is predicted to increase by $0.09. constraint 2 Constraint 2 has a dual value of 5. If the risk index is increased by 1, the total annual retum is predicted to increase by ss. Constraint 2 has a dual value of 3. If the risk index is increased by 1, the total annual return is predicted to increase by $3. Constraint 2 has a dust value of 1.33. If the risk index is increased by 1, the total annual return la predicted to increase by $1.33 Constraint has a slack of 200. Allowing additional risk will not improve the total annual return. Constraint 2 has a dual value of 0.09. If the risk index is increased by 1, the total annual return is predicted to increase by $0.09. constraint 3 Constraint 3 has a dual value of 5. If the maximum number of shares of U.S. Olis increased by 1, the total annual return is predicted to increase by $5. Constraint 3 has a dual value of 3. If the maximum number of shares of U.S. Oil is increased by 1, the total annual return is predicted to increase by $3. Constraint 3 has a dual value of 1.33. If the maximum number of shares of U.S. Of is increased by 1, the total annual return is predicted to increase by $1.33. Constraint 3 has a slack of 200 shares Raising the maximum number of shares of U.S. Oil will not improve the total annual return Constraint 3 has a dual value of 0.09. If the maximum number of shares of U.S. Oil is increased by 1, the total annual return is predicted to increase by $0.09 (d) Would it be beneficial to increase the maximum amount invested in U.S. Ot? Why or why not? Yes, each additional share increases the profit by $0.09. Yes, each additional share increases the profit by $1.33 Yes, each additional share increases the profit by $200.00 No, increasing the maximum shares does not affect the optimal value Sign in - Macy's Handshak Velor's Secret Camp Investment Advisors, Inc., is a brokerage firm that manages stock portfolios for a number of clients. A particular portfolio consists of shares of U.S. of and shares of Huber Steel. The annual return for U.S. Olis 33 per share and the annual return for Haber Steel 55 per share. US. O sells for $25 per share and Huber Steelsels for $50 per share. The portfolio has $10,000 to be invested. The portfolio risk index (0.50 per share of U.S. oland 0.25 per share for Huber Steel) has a maximum of 700. In addition, the portfolio is limited to a maximum of 1,000 shares of U.S.O. The linear programming formulation that will make the total anual return of the portfolio is as follows Max JUS Maximize total annual return St. 250 SON 30,000 Funds available 0.SOU + 0.25H 700 Risk mamm TU 51,000 U.S. O maximum UH 20 The computer output is shown below Optective Value 100.00000 VAFIA Va MOD.00000 1200.00000 Hd 0.00000 0.000 HI Contrat NAV LED 0.00000 0.000 200.000 0.00000 Varia Aline 06 Cutitet 3.0000 1.00000 1.00000 TODO ALLA Deere O doo SODDO Contraint Abi NE VA Inc 1000000000 0.000 11000. dodou 700.00000 15:00 300..10000 100000000 It 200.000 (a) What is the optimal solution, and what is the value of the total annual return on ) H estimated annual return U Handshake Victoria's Secret A. Campuswire (b) Which constraints are binding? What is your interpretation of these constraints in terms of the problem? (Select all that apply.) Constraint 1. All funds available are being utilized Constraint 2. The maximum permissible risk is being incurred. Constraint 3. All available shares of U.S. Oil are being purchased. None of the constraints are binding (c) What are the dual values for the constraints? Interpret each. (Round your answers to two decimal places.) constraint 1 O Constraint 1 has a dual value of 5. If an additional dollar is added to the available funds, the total annual return is predicted to increase by $5. Constraint 1 has a dual value of 3. If an additional dollar is added to the available funds, the total annual return is predicted to increase by $3. Constraint 1 has a dual value of 1.33. If an additional dollar is added to the available funds, the total annual return is predicted to increase by $1.33. Constraint 1 has a slack of $200. Additional dollars added to the available funds will not improve the total annual return. Constraint 1 has a dual value of 0.09. If an additional dollar is added to the available funds, the total annual return is predicted to increase by $0.09. constraint 2 Constraint 2 has a dual value of 5. If the risk index is increased by 1, the total annual retum is predicted to increase by ss. Constraint 2 has a dual value of 3. If the risk index is increased by 1, the total annual return is predicted to increase by $3. Constraint 2 has a dust value of 1.33. If the risk index is increased by 1, the total annual return la predicted to increase by $1.33 Constraint has a slack of 200. Allowing additional risk will not improve the total annual return. Constraint 2 has a dual value of 0.09. If the risk index is increased by 1, the total annual return is predicted to increase by $0.09. constraint 3 Constraint 3 has a dual value of 5. If the maximum number of shares of U.S. Olis increased by 1, the total annual return is predicted to increase by $5. Constraint 3 has a dual value of 3. If the maximum number of shares of U.S. Oil is increased by 1, the total annual return is predicted to increase by $3. Constraint 3 has a dual value of 1.33. If the maximum number of shares of U.S. Of is increased by 1, the total annual return is predicted to increase by $1.33. Constraint 3 has a slack of 200 shares Raising the maximum number of shares of U.S. Oil will not improve the total annual return Constraint 3 has a dual value of 0.09. If the maximum number of shares of U.S. Oil is increased by 1, the total annual return is predicted to increase by $0.09 (d) Would it be beneficial to increase the maximum amount invested in U.S. Ot? Why or why not? Yes, each additional share increases the profit by $0.09. Yes, each additional share increases the profit by $1.33 Yes, each additional share increases the profit by $200.00 No, increasing the maximum shares does not affect the optimal value

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access with AI-Powered 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

Quantitative Analysis For Management

Authors: Barry Render, Ralph M. Stair, Michael E. Hanna

11th Edition

9780132997621, 132149117, 132997622, 978-0132149112

Students also viewed these Accounting questions

Question

=+Find and interpret an autoregressive model for the euro prices.

Answered: 1 week ago