How should his investment be diversified

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Question - For the following question, use financial application methodology.

An investor wishes to invest some or all of his $12.5 million in a diversified portfolio through a commercial lender. The types of investments, the expected interest per year, and the maximum allowed percentage investment he will consider are shown on the following table. He wants at least 35% of his investments to be in nonmortgage instruments and no more than 60% to be in high-yield (and high-risk) instruments (i.e., expected interest >8%). How should his investment be diversified to make the most interest income?

Investment

Expected Interest

Maximum Allowed

Low-income mortgage loans

7.00%

20%

Conventional mortgage loans

6.25%

40%

Government-sponsoredmortgage loans

8.25%

25%

Bond investments

5.75%

12%

Stock investments

8.75%

15%

Futures trading

9.50%

10%

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Reference no: EM131559333

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Reviews

len1559333

7/10/2017 2:40:48 AM

I need a spreadsheet of the solution to the answer. There is no objective function outcome value and there are no values for the LHS S RHS constraints. Sensitivity reports are also wrong. As is this submission is assessed at zero point. I suggest read the assigned chapters very carefully, and actually do the solved problems before attempting to do the homework.

len1559333

7/10/2017 2:40:42 AM

Application of Methods, Tools, and Techniques - Able to put key concepts in formulating the problem, developing the LP layout, using appropriate formulas for objective function and constraints, applies Excel Solver program for finding solutions, producing output reports, and correctly interpreting results to answer questions asked. Analysis - Analysis demonstrates an excellent understanding of the use and limitations of Linear Programming. Critical Thinking - Conclusions and Recommendations - Draws informed conclusions that are justified with evidence from the output reports and correctly interpreting results. Writing(Mechanics/Style) - No errors related to organization and grammar. Style is professional, compelling, and uses appropriate vocabulary.

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