Question
In: Math
A person wants to invest $10,000 into stocks: a high tech company (T) with an expected...
A person wants to invest $10,000 into stocks: a high tech company (T) with an expected annual return of 12% and a risk index of 8; and a regulated power company (P) with an expected annual return of 6% and a risk index of 2. To limit risk, the combined portfolio risk must be no more than 6 and the proportion of investment in T must be less than 60%. Find the portfolio that will maximize the annual return R while meeting the risk limitations.
a. Formulate the Investment Portfolio problem with the requirement of investing up to $10,000, and solve it graphically.
b. Compute the increase in annual return if the total investment is increased by $1,000.
c. Compute the increase in annual return if the constraint of portfolio risk index is increased from 6 to 7.
Solutions
milcah answered 5 months agoRelated Solutions
A person wants to invest $10,000 into stocks: a high tech company (T) with an expected...
A person wants to invest $10,000 into stocks: a high tech
company (T) with an expected annual return of 12% and a risk index
of 8; and a regulated power company (P) with an expected annual
return of 6% and a risk index of 2. To limit risk, the combined
portfolio risk must be no more than 6 and the proportion of
investment in T must be less than 60%. Find the portfolio that will
maximize the annual return R...
Mr. Jones has $10,000 to invest in three types of stocks: low-risk, medium-risk and high-risk. He...
Mr. Jones has $10,000 to invest in three types of stocks:
low-risk, medium-risk and high-risk. He invests according to the
following rules: the amount invested in low-risk stocks will be at
most $2000 more than the amount invested in medium-risk stocks. At
least $4000 will be invested in a combination of low- and
medium-risk stocks. No more than $8,000 will be invested in a
combination of medium- and high-risk stocks. The expected annual
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4.Jane wants to create a $10,000 portfolio. She also wants to invest as much as possible...
4.Jane wants to create a $10,000 portfolio. She also wants to
invest as much as possible in a high risk stock with the hope of
earning a high rate of return. However, she wants her portfolio to
have no more risk than the overall market. Which one of the
following portfolios is most apt to meet all of her
objectives?
A.Invest the entire $ 10,000 in a stock with a beta of
1.0
B.Invest $5,000 in a stock with a...
You decided to invest your wealth of $10,000 in a portfolio of three stocks. You also...
You decided to invest your wealth of $10,000 in a portfolio of
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$3,000. After the short sale you will invest $8,000 of your cash in
stock 2 and the remainder in stock 3. The expected rate of return
of stock 2 is R2 = 18% and of stock 3 is R3 =
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rate of...
1 )A person invest $10,000 into an account that earns 6% in interest over 20 years....
1 )A person invest $10,000 into an account that earns 6% in
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Your grandfather gives your $10,000 to invest and you must invest every penny. He wants you...
Your grandfather gives your $10,000 to invest and you must
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Aiden had 12 stocks in his portfolio, 7 of them are high tech companies and 5...
Aiden had 12 stocks in his portfolio, 7 of them are high tech
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least on of the selceted is high tech company
The answer is 98/99 but im not sure how to do the steps.
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A person wants to invest $14,000 for 3 years and is considering
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Select the correct choice below and, if necessary, fill in any
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Overnight Capital Ventures (OCV) is looking to invest $5.5 million dollars for high-tech equipment. OCV is...
Overnight Capital Ventures (OCV) is
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is planning to house the equipment in an unused warehouse that they
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It would take two years, and capital
expenditures of $550,000 per year to install and test the high-tech
equipment and make it ready...
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