Determining the proportion of the amount

Assignment Help Engineering Mathematics
Reference no: EM13962294

Annabelle Sizemore has cashed in some treasury bonds and a life insurance policy that her parents had accumulated over the years for her. She has also saved some money in certificates of deposit and savings bonds during the 10 years since she graduated from college. As a result, she has $120,000 available to invest. Given the recent rise in the stock market, she feels that she should invest all of this amount there. She has researched the market and has decided that she wants to invest in an index fund tied to S&P stocks and in an Internet stock fund. However, she is very concerned about the volatility of Internet stocks. Therefore, she wants to balance her risk to some degree.

She has decided to select an index fund from Shield Securities and an Internet stock fund from Madison Funds, Inc. She has also decided that the proportion of the dollar amount she invests in the index fund relative to the Internet fund should be at least one-third but that she should not invest more that twice the amount in the Internet fund that she invests in the index fund. The price per share of the index fund is $175, whereas the price per share of the internet fund is $208. The average annual return during the last 3 years for the index fund has been 17%, and for the Internet stock fund it has been 28%. She anticipates that both mutual funds will realize the same average returns for the coming year that they have in the recent past; however, at the end of the year she is likely to reevaluate her investment strategy anyway. Thus, she wants to develop an investment strategy that will maximize her return for the coming year.

Formulate a linear programming model for Annabelle that will indicate how much money she should invest in each fund and solve this model by using the graphical method.

Suppose Annabelle decides to change her risk-balancing formula by eliminating the restriction that the proportion of the amount she invests s in the index fund to the amount that she invests in the Internet fund must be at least one-third. What will the effect be on her solution? Suppose instead that she eliminates the restriction that the proportion of money she invests in the Internet fund relative to the stock fund not exceed a ratio of 2 to 1. How will this affect her solution?

If Annabelle can get $ more to invest, how that affect her solution: $2 more? $3 more? What can you say about her return on her investment strategy, given these successive changes?

Reference no: EM13962294

Questions Cloud

Linear programming model for the problem : a) Formulate the linear programming model for the problem. b) Use the Graphical method to find the optimal solution. Show all steps. c) Use Excel Solver to find the optimal solution. Copy and paste your spreadsheet and the Answer report from Excel.
Find the magnetic field at point q whose coordinates (2a,-a) : Use the law of Biot and savart to find the magnetic field at the point P(a,-a)in the x-y plane. Then find the magnetic field at the point Q whose coordinates are (2a, -a).
Show how a switch and resistor can be used to create a logic : Show how a switch and resistor can be used to create a logic level 1 or 0 for a digital input circuit. Obtain a data sheet for a Passive Infra Red Detector and show how it can be configured to provide a logic level 1 when it detects the presence of a..
Determine the general solution of this differential equation : Suppose that, when the particle is at its equilibrium position, it is given a blow so that its speed instantaneously becomes vo in the downward direction. The particle is observed just to reach the fixed point B in its subsequent motion. Use your an..
Determining the proportion of the amount : Suppose Annabelle decides to change her risk-balancing formula by eliminating the restriction that the proportion of the amount she invests s in the index fund to the amount that she invests in the Internet fund must be at least one-third. What wi..
Potential profit for various purchase levels : Your potential profit for various purchase levels under each of the five possible market conditions is shown in the table below.
Calculate the h -field along the z-axis. : A constant current I flows in the loop. Use the Biot-Savart Law to calculate the H -field along the z-axis.
Formulate pmw problem as a linear program : Formulate PMW's problem as a linear program. Solve by using the graphical procedure, then by using Excel.
Draw a typical graph showing silicon diode performance chara : a) Draw a typical graph showing Silicon diode performance characteristics with applied voltage on the x axis and diode current on the y axis, including both positive and negative voltages and currents.

Reviews

Write a Review

 

Engineering Mathematics Questions & Answers

  Cost of supplementary ingredients at a minmum

A pound of supplement two added to each productions batch of Toasties will provide 2 units of vitamin A and 1 unit of vitamin B for each box. How can Ajax satisfy these minimum vitamin requirement while keeping the cost of supplementary ingredient..

  What is the mass of the sphere

A hollow sphere of inner radius 8.0 cm and outer radius 9.0 cm floats half-submerged in a liquid of density 800 kg/m3. (a) What is the mass of the sphere?

  The least squares equation regression equation issues

What is the chi squared statistic for the given information?

  Cmpute the condition number for each root of the equation

1- compute the condition number of each eigenvalues of the matrix 0 -1 1 2b and determine for which values of b the

  Determine and sketch the autocorrelation function

The power spectral density of a random process X (t) is shown in Figure. It contains of a delta function at f = 0 and a triangular component. (a) Determine and sketch the autocorrelation function RX (t) of X (t).

  Linear programming model-optimal production scheduling mix

Formulate a linear programming model that can be used to determine the optimal production scheduling mix that yields the best contribution solution while meeting the inventory capacity restrictions of the division for the week.

  Intermediate nodes and destination nodes

In, addition, assume that no travel is possible between source nodes, between intermediate nodes and between destination nodes and no direct travel from source nodes to destination nodes. Let the source nodes be labeled as 1, 2, and 3, the interme..

  How many time will each person shake hands with someone else

How many times will each person shake hands with someone else? How many handshakes will occur? How must your method vary according to whether or not n is even or odd?

  Carefully define the decision variables

The profit generated by each table is $40, by each chair is $30, and by each bookcase is $35. The company wishes to get the maximum profit possible, and a linear program is to be developed for this purpose.

  Interpret the null hypothesis using your t-statistic

Interpret the null hypothesis using your t-statistic. Interpret the null hypothesis using p-value. Interpret your confidence interval and test the null hypothesis using confidence interval.

  Formulate a mathematical model

Formulate a mathematical model to help Widgetco determine the amount to produce at each plant so that net profit is maximized. Implement the model in Excel and use Solver to find the optimal solution.

  Two linear regression and multiple regression

Does it appear that gender/sex is a significant factor in the differences in salary in this sample?

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd