### Formulate a bip model in algebraic form

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##### Reference no: EM1315797

Computation of Portfolio Return, Beta and risk involved.

Risk & Return

A stock has beta of 1.5 and an expected return of 11%. A risk free asset earns 2%.

(a) What is the expected return on a portfolio that is equally invested in the two assets?

(b) If a portfolio of the two assets has a beta of 0.9 what are the portfolio weights?

(c) If a portfolio of the two assets has an expected return of 9%, what is the beta?

(d) If a portfolio of the two assets has a beta of 1.80, what are the portfolio weights? How do you interpret the weights for the two assets in this case? Explain.

Minimum cost of order using linear programming technique.

The school board for the Bellevue School District has made the decision to purchase 1,350 additional Macintosh computers for computer laboratories in all its schools. Based on past experience, the school board also has directed that these computers should be purchased from some combination of three companies - Educomp, Macwin and McElectronics. In all three cases, the companies charge a discounted variable cost per computer and a fixed delivery and installation cost for these large sales to school districts. The table below shows these charges as well as the capacity (the maximum number of computers that can be sold from the limited inventory) for each of the companies.

 Educomp Macwin McElectronics Capacity 700 700 1,000 Fixed cost \$45,000 \$35,000 \$50,000 Variable cost \$750 \$775 \$700

The school board wants to determine the minimum-cost plan for meeting its computer needs.

1. Formulate a BIP model in algebraic form for this problem.

2. Formulate and solve this model on a spreadsheet.

Verified Expert

Ques 1 relates risk & return of portfolio of two assets- Stock and risk free rate. the calculation of weights of portfolio assets have been made and questions relates to calculation of risk and returns of the portfolio. Ques 2 was in relation to formulation of Linear programming and the problem has been solved in excel spreadsheet using excel

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