90.2K

Verified Solution

Link Copied!

3. John Sweeney is an investment advisor who is attempting to construct an optimal portfolio" for a client who has $400,000 cash to invest. There are ten different investments, falling into four broad categories that John and his client have identified as potential candidates for this portfolio. The following table lists the investments and their important characteristics. Note that Unidyde Equities (stocks) and Unidyde Debt (bonds) are two separate investments, whereas First General REIT is a single investment that is considered both an equities and a real estate investment. Category Investment Exp. Annual After Tax Return Unidyne Corp. 15.0% Equities Col. Mustard Restaurant 17.5% First General REIT 12.5% Metropolitan Electric 12.5% Debt Unidyne Corp 11.0% Lemonville Transit 15.0% Fairview Apartment Partnership 16.0% Real Estate First General REIT (see above) T-Bill Account 8.5% Money Money Market Fund 9.5% All Saver's Certificate 7.5% Formulate and solve a linear program to accomplish John's objective as an investment advisor which is to construct a portfolio that maximizes his client's total expected after-tax return over the next year, subject to a number of constraints placed upon him by the client for the portfolio: At most, $80,000 is to be invested in Unidyde stocks or bonds. No more than 40% of the investment can be in any one category except the money category. No more than 25% of the investment can be in any one investment except the money market fund. REIT is a single investment that is considered both an equities and a real estate investment Category Investment Exp. Annual After Tax Return Unidyne Corp 15.0% Equities Col. Mustard Restaurant 17.5% First General REIT 12.5% Metropolitan Electric 12.5% Debt Unidyne Corp 11.0% Lemonville Transit 15.0% Fairview Apartment Partnership 16.0% Real Estate First General REIT (see above) T-Bull Account 8.5% Money Money Market Fund 9.5% All Saver's Certificate 7.5% Formulate and solve a linear program to accomplish John's objective as an investment advisor which is to construct a portfolio that maximizes his client's total expected after-tax retum over the next year, subject to a number of constraints placed upon him by the client for the portfolio: At most, $80,000 is to be invested in Unidyde stocks or bonds. No more than 40% of the investment can be in any one category except the money category No more than 25% of the investment can be in any one investment except the money market fund. At least $30,000 must be invested in the money market fund. The maximum investment in All Saver's Certificates is $50,000, The minimum investment desired for debt is $50,000. At least $30,000 must be placed in a T Bill account (Hint: You need 10 decision variables to develop this LP problem.) 3. John Sweeney is an investment advisor who is attempting to construct an optimal portfolio" for a client who has $400,000 cash to invest. There are ten different investments, falling into four broad categories that John and his client have identified as potential candidates for this portfolio. The following table lists the investments and their important characteristics. Note that Unidyde Equities (stocks) and Unidyde Debt (bonds) are two separate investments, whereas First General REIT is a single investment that is considered both an equities and a real estate investment. Category Investment Exp. Annual After Tax Return Unidyne Corp. 15.0% Equities Col. Mustard Restaurant 17.5% First General REIT 12.5% Metropolitan Electric 12.5% Debt Unidyne Corp 11.0% Lemonville Transit 15.0% Fairview Apartment Partnership 16.0% Real Estate First General REIT (see above) T-Bill Account 8.5% Money Money Market Fund 9.5% All Saver's Certificate 7.5% Formulate and solve a linear program to accomplish John's objective as an investment advisor which is to construct a portfolio that maximizes his client's total expected after-tax return over the next year, subject to a number of constraints placed upon him by the client for the portfolio: At most, $80,000 is to be invested in Unidyde stocks or bonds. No more than 40% of the investment can be in any one category except the money category. No more than 25% of the investment can be in any one investment except the money market fund. REIT is a single investment that is considered both an equities and a real estate investment Category Investment Exp. Annual After Tax Return Unidyne Corp 15.0% Equities Col. Mustard Restaurant 17.5% First General REIT 12.5% Metropolitan Electric 12.5% Debt Unidyne Corp 11.0% Lemonville Transit 15.0% Fairview Apartment Partnership 16.0% Real Estate First General REIT (see above) T-Bull Account 8.5% Money Money Market Fund 9.5% All Saver's Certificate 7.5% Formulate and solve a linear program to accomplish John's objective as an investment advisor which is to construct a portfolio that maximizes his client's total expected after-tax retum over the next year, subject to a number of constraints placed upon him by the client for the portfolio: At most, $80,000 is to be invested in Unidyde stocks or bonds. No more than 40% of the investment can be in any one category except the money category No more than 25% of the investment can be in any one investment except the money market fund. At least $30,000 must be invested in the money market fund. The maximum investment in All Saver's Certificates is $50,000, The minimum investment desired for debt is $50,000. At least $30,000 must be placed in a T Bill account (Hint: You need 10 decision variables to develop this LP problem.)

Answer & Explanation Solved by verified expert

See Answer