Question
Your friend's portfolio manager has suggested two high-yielding stocks: Consolidated Edison (ED) and Royal Bank of Scotland (RBS-K). ED shares cost $40, yield 5.5% in
Your friend's portfolio manager has suggested two high-yielding stocks: Consolidated Edison (ED) and Royal Bank of Scotland (RBS-K). ED shares cost $40, yield 5.5% in dividends, and have a risk index of 1.2 per share. RBS-K shares cost $25, yield 7.5% in dividends, and have a risk index of 1.4 per share. You have up to $28000 to invest and would like to earn at least $1540 in dividends. How many shares (to the nearest tenth of a unit) of each stock should you purchase in order to meet your requirements and minimize the total risk index for your portfolio? Buy _______ shares of ED and ______ shares of RBS-K. The minimum total risk index is c = _______ .
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