INVESTMENT ANALYSIS Jorge has decided to invest at most
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Chapter 4 Solutions
Finite Mathematics for the Managerial, Life, and Social Sciences
- 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 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 Solve the problem using the graphical solution procedure. If required, round the…arrow_forwardAn investor has $25,000 to invest. He wants to diversify his portfolio by putting dividing the money among stocks, bonds and mutual funds. He has chosen one fund from each type in which to invest. Over the last 10 years the stocks have earned 8.75%, the bonds have earned 5.25% and the mutual fund has earned 7.5% interest. The investor expects that the funds will all continue to perform in the future similarly to how they have performed over the last ten years. The investor has decided that he will invest twice as much money in stocks as he will in mutual funds. How much should he invest in each account in order to earn a 7% return on his investment?arrow_forward
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