Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Soru 1. (20 puan) ORGASA has a portfolio of investments in shares, bonds and other investment alternatives. Now it has available funds amounting to $200,000

image text in transcribed

Soru 1. (20 puan) ORGASA has a portfolio of investments in shares, bonds and other investment alternatives. Now it has available funds amounting to $200,000 which must be considered for new investments. The four investment alternatives that ORGASA is contemplating are offered in table below. Financial details Price per share ($) Annual rate of retum Measure of risk per S invested Telefnita 100 0.12 0.10 Sankander 50 0,08 0.07 Ferrotial 80 0.06 0.05 Gamefa 10 0.10 (0.08 The measure of risk indicates uncertainty associated with the share in terms of its capacity to reach the annual return foreseen: the higher the value. the greater the risk. ORGASA has stipulated the annual rate of return from this portfolio must be at least 9% and no value can represent more than 50 % of the total investment in dollars. Use the linear programming model to develop a portfolio of investments which minimizes the nsk. (10 pts) If the firm ignores the risk involved and uses a maximum return strategy on its investment how will the former model be amended? (10 pts)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored 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

Financial Accounting

Authors: Belverd E Needles, Marian Powers

10th Edition

0547193289, 9780547193281

More Books

Students also viewed these Finance questions