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. Selecting an Investment Portfolio: An investment manager wants to determine an optimal portfolio for a wealthy client. The fund has $ 2 . 5
Selecting an Investment Portfolio: An investment manager wants to determine an optimal portfolio for a wealthy client. The fund has $ million to invest, and its objective is to maximize total dollar return from both growth and dividends over the course of the coming year. The client has researched eight hightech companies and wants the portfolio to consist of shares in these firms only. Three of the firms SS are primarily software companies, three HH are primarily hardware companies, and two CC are internet consulting companies. The client has stipulated that no more than percent of the investment be allocated to any one of these three sectors To ensure diversification, at least $ must be invested in each of the eight stocks. Moreover, the number of shares invested in any stock must be a multiple of The table below gives estimates from the investment companys database relating to these stocks. These estimates include price per share, the projected annual growth rate in the share price, and the anticipated annual dividend payment per share. S S S H H H C C PriceShare $ $ $ $ $ $ Growth Rate $ Dividend $ $ $ $ $ $ $ $ $ a Determine the maximum return on the portfolio. What is the optimal number of shares to buy for each of the stocks? What is the corresponding amount invested in each stock? b If there were no integer restriction on the number of the shares invested, how would your solution in part a change?
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