Question Four: (10marks) A company can invest in short-term stocks, trade credit, silver stocks, and petroleum...

Transcribed Image Text:

Question Four: (10marks) A company can invest in short-term stocks, trade credit, silver stocks, and petroleum contracts. To encourage a diversified portfolio, the board of directors has placed limits on the amount that can be committed to any one type of investment. The company has $7 million available for immediate investment and wishes to maximize the interest earned on the investments made next year. The specifics of the investment possibilities are: Investment short-term stocks Interest rate (yearly) 10% Maximum amount to be invested(million) $3 silver stocks 15% $2 trade credit 8% $1 petroleum contracts 12% $1.8 In addition, the company specifies that at least 20% of the total funds Invested must be in petroleum contracts, at least 15% of total amount should be invested in trade credit and the amount invested in silver stock should be more than double the amount invested in petroleum contract. Question Four: (10marks) A company can invest in short-term stocks, trade credit, silver stocks, and petroleum contracts. To encourage a diversified portfolio, the board of directors has placed limits on the amount that can be committed to any one type of investment. The company has $7 million available for immediate investment and wishes to maximize the interest earned on the investments made next year. The specifics of the investment possibilities are: Investment short-term stocks Interest rate (yearly) 10% Maximum amount to be invested(million) $3 silver stocks 15% $2 trade credit 8% $1 petroleum contracts 12% $1.8 In addition, the company specifies that at least 20% of the total funds Invested must be in petroleum contracts, at least 15% of total amount should be invested in trade credit and the amount invested in silver stock should be more than double the amount invested in petroleum contract.