(Investment): An investor has $150,000 to invest in oil stock, steel stock, and government bonds. The...

50.1K

Verified Solution

Question

Advance Math

(Investment): An investor has $150,000 to invest in oil stock,steel stock, and government bonds. The bonds are guaranteed toyield 5%, but the yield for each stock can vary. To protect againstmajor losses, the investor decides that the amount invested in oilstock should not exceed $50,000. The total amount invested in stockCANNOT exceed the amount invested in bonds by more than$25,000.
a) Set up the problem (decision variables, problem constraints,non-negativity constraints).
b) Now form the objective function if oil stock yields 12% andthe steel stock yields 9%. How much should be invested in eachalternative in order to maximize the return (don't forget thebonds). What is the maximum return?

Answer & Explanation Solved by verified expert

4.0 Ratings (648 Votes)

x1 amount invest in oil stockx2 amount invest in steel stockx3 amount invest in government bondsAninvestor has 150000 to investtheamount invested in oil stock should not exceed 50000Thetotal amount invested in stock CANNOT exceed the amount invested inbonds by more than 25000our system issubject See Answer

Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:

Unlimited Question Access with detailed Answers
Zin AI - 3 Million Words
10 Dall-E 3 Images
20 Plot Generations
Conversation with Dialogue Memory
No Ads, Ever!
Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!

Become a Member