Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Stock in Company A sells for $92 a share and has a 3-year average annual return of $21 a share. The beta value is 1.22.
Stock in Company A sells for $92 a share and has a 3-year average annual return of $21 a share. The beta value is 1.22. Stock in Company B sells for $81 a share and has a 3-year average annual return of $18 a share. The beta value is 1.11. Derek wants to spend no more than $19,000 investing in these two stocks, but he wants to earn at least $2900 in annual revenue. Derek also wants to minimize the risk. Determine the number of shares of each stock that Derek should buy. Set up the linear programming problem. Let a represent the number of shares of stock in Company A, b represent the number of shares of stock in Company B, and z represent the total beta value. Minimize z= 1.22a 1.11b subject to 92a 81b s 19,000 21a 18b 2 2900 a20, b20. (Use integers or decimals for any numbers in the expressions. Do not include the $ symbol in your answers.) Derek should buy share(s) of stock in Company A and share
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started