Question
Pine Investment Group has a budget of $50,000 to invest in three different types of assets: real estate, stocks, and bonds. Each investment provides a
Pine Investment Group has a budget of $50,000 to invest in three different types of assets: real estate, stocks, and bonds. Each investment provides a fixed annual return, as shown in the table below:
Investment | Investment Requirements | Annual Return |
Real Estate | $38,500 | $4800 |
Stocks | $31,500 | $3200 |
Bonds | $15,000 | $750 |
The group wants to determine the optimal selection of investments to maximize the total annual return, subject to the following constraints:
- The total amount invested cannot exceed the available budget of $50,000.
- At least two types of investments must be selected to minimize the risk.
Develop a binary linear program to determine the optimal selection of investments that maximizes the total annual return. Please include the decision variables, objective function, and all constraints, and solve the problem using a solver.
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Get StartedRecommended Textbook for
Finance Applications and Theory
Authors: Marcia Cornett, Troy Adair
3rd edition
1259252221, 007786168X, 9781259252228, 978-0077861681
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