Jeff is willing to invest $5000 in buying shares and bonds of acompany to gain maximum returns.
Question:
Jeff is willing to invest $5000 in buying shares and bonds of acompany to gain maximum returns. From his past experience, heestimates the relationship between returns and investments made inthis company to be: R = –2S2 – 9B2 – 4SB + 20S + 30B. where, R =total returns in thousands of dollars S = thousands of dollarsspent on Shares B = thousands of dollars spent on Bond Jeff wouldlike to develop a strategy that will lead to maximum return subjectto the restriction provided on amount available for investment. a.What is the value of return if $3,000 is invested in shares and$2,000 is invested bonds of the company? b. Formulate anoptimization problem that can be solved to maximize the returnssubject to investing no more than $5,000 on both share and bonds.c. Determine the optimal amount to invest in shares and bonds ofthe company. How much return will Jeff gain? Round all your answersto two decimal places.
Business Statistics In Practice
ISBN: 9780073401836
6th Edition
Authors: Bruce Bowerman, Richard O'Connell