Question
In: Advanced Math
Problem 2-25 (Algorithmic) George Johnson recently inherited a large sum of money; he wants to use...
Problem 2-25 (Algorithmic)
George Johnson recently inherited a large sum of money; he wants to use a portion of this money to set up a trust fund for his two children. The trust fund has two investment options: (1) a bond fund and (2) a stock fund. The projected returns over the life of the investments are 8% for the bond fund and 20% for the stock fund. Whatever portion of the inheritance he finally decides to commit to the trust fund, he wants to invest at least 40% of that amount in the bond fund. In addition, he wants to select a mix that will enable him to obtain a total return of at least 5.5%.
- Formulate a linear programming model that can be used to
determine the percentage that should be allocated to each of the
possible investment alternatives. If required, round your answers
to three decimal places.
Let B = percentage of funds invested in the bond fund S = percentage of funds invested in the stock fund B + S s.t. B Bond fund minimum B + S Minimum return B + S Percentage requirement - Solve the problem. If required, round the answers to one
decimal place.
Optimal solution: B = , S =
Value of optimal solution is % ????
Solutions
Colby Messinger answered 10 months agoRelated Solutions
George Johnson recently inherited a large sum of money; he wants to use a portion of...
George Johnson recently inherited a large sum of money; he wants
to use a portion of this money to set up a trust fund for his two
children. The trust fund has two investment options: (1) a bond
fund and (2) a stock fund. The projected returns over the life of
the investments are 8% for the bond fund and 20% for the stock
fund. Whatever portion of the inheritance George finally decides to
commit to the trust fund, he...
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State of Nature
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Economy
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bank's investments department, he's well aware of the concept of
duration and decides to apply it to his bond portfolio. In
particular, Elliot intends to use $1million of his inheritance to
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1. An 8.62% 13-year bond that's priced at $ 1,093.74 to yield
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Elliot Karlin is a 35-year-old bank executive who has just inherited a large sum of money....
Elliot Karlin is a 35-year-old bank executive who has just
inherited a large sum of money. Having spent several years in the
bank's investments department, he's well aware of the concept of
duration and decides to apply it to his bond portfolio. In
particular, Elliot intends to use $1million of his inheritance to
purchase 4 U.S. Treasury bonds:
1. An 8.62%,13-year bond that's priced at $1,094.61 to yield
7.47%.
2. A 7.771%, 15-year bond that's priced at $1017.84 to yield...
Elliot Karlin is a 35-year-old bank executive who has just inherited a large sum of money....
Elliot Karlin is a 35-year-old bank executive who has just
inherited a large sum of money. Having spent several years in the
bank's investments department, he's well aware of the concept of
duration and decides to apply it to his bond portfolio. In
particular, Elliot intends to use $ 1 $1 million of his inheritance
to purchase 4 U.S. Treasury bonds:
1. An 8.58%, 13-year bond that's priced at $1,090.45 to yield
7.48%.
2. A 7.865%, 15-year bond that's priced...
Elliot Karlin is a 35-year-old bank executive who has just inherited a large sum of money....
Elliot Karlin is a 35-year-old bank executive who has just
inherited a large sum of money. Having spent several years in the
bank's investments department, he's well aware of the concept of
duration and decides to apply it to his bond portfolio. In
particular, Elliot intends to use $ 1million of his inheritance to
purchase 4 U.S. Treasury bonds:
1. An 8.59 %, 13-year bond that's priced at $ 1,093.02to
yield 7.46 %.
2. A 7.777 %, 15-year bond that's...
Elliot Karlin is a 35-year-old bank executive who has just inherited a large sum of money....
Elliot Karlin is a 35-year-old bank executive who has just
inherited a large sum of money. Having spent several years in the
bank's investments department, he's well aware of the concept of
duration and decides to apply it to his bond portfolio. In
particular, Elliot intends to use $ 1 million of his inheritance to
purchase 4 U.S. Treasury bonds:
1. An 8.69 %, 13-year bond that's priced at $ 1 comma 100.37 to
yield 7.47 %.
2. A 7.821...
Elliot Karlin is a 35-year-old bank executive who has just inherited a large sum of money....
Elliot Karlin is a 35-year-old bank executive who has just
inherited a large sum of money. Having spent several years in the
bank's investments department, he's well aware of the concept of
duration and decides to apply it to his bond portfolio. In
particular, Elliot intends to use $1 million of his inheritance to
purchase 4 U.S. Treasury bonds:
1. An 8.59%, 13-year bond that's priced at $1,091.27 to yield
7.48%.
2. A 7.795%, 15-year bond that's priced at $1019.97...
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