Refer to the Bhavika Investments (Problem 7-37) situation once again. It has been decided that, rather than

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Refer to the Bhavika Investments (Problem 7-37) situation once again. It has been decided that, rather than minimize risk, the objective should be to maximize return while placing restriction on the amount of risk. The average risk should be no more than 11 (with a total risk of 2,200,000 for the $200,000 invested). The linear program was reformulated, and the QM for Windows output is shown below.
(a) How much money should be invested in the money market fund and the stock fund? What is the total return? What rate of return is this?
(b) What is the total risk? What is the average risk?
(c) Would the solution change if return for each dollar in the stock fund were 0.09 instead of 0.10?
(d) For each additional dollar that is available, what is the marginal rate of return?
(e) How much would the total return change if the amount that must be invested in the money market fund were changed from $40,000 to$50,000?
Refer to the Bhavika Investments (Problem 7-37) situation once a
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Quantitative Analysis for Management

ISBN: 978-0132149112

11th Edition

Authors: Barry render, Ralph m. stair, Michael e. Hanna

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