MSCI 2200 Chapter 4: Linear Programming Applications
Document Summary
An investment company currently has 10 million to invest. The goal is to maximize expected return earned over the next year. The four investment possibilities and relevant rates of return and limits are summarized below. In addition, the company has specified that at least 30% of the funds must be placed in common stock and treasury bonds, and no more than 40% in money market funds and municipal bonds. All of the 10 million currently on hand will be invested. Tb (cid:950) 5, cs (cid:950) 7, mm (cid:950) 2, mb (cid:950) 4. Tb + cs + mm + mb = 10 million. Payment of ,000 six months from now when equipment is delivered. Develop an investment strategy that minimizes the amount of cash she must initially place in the fund. Average risk index must be no more than 6. At the beginning of each month, the average months to maturity must be no more than 2. 5 months.
