Question

Question 3 A brokerage firm has been tasked with investing exactly $200,000 for a new client. The client has asked that the broker select promising stocks and bonds for investing subject to the following guidelines: 1) At least 30% of the total investment should be in municipal bonds 2) At least 20% of the total investment should be in real estate stock 3) At least 20% of the total investment should be in domestic automobile stock 4) At least 25% of the total investment should be in combination of the amount invested energy and pharmaceutical stocks. 5) The amount invested in a combination of the amount invested real estate and pharmaceutical stock should be no more than 40% of the total amount that is invested in a combination of energy and automobile stocks. Subject to these constraints, the client’s goal is to maximize the projected return on investment. A list of potential investments are in the table below: Formulate this as an LP problem and solve in Excel. a) What is the total return for your investment strategy? b) How much should be invested ($) in each investment?

Answer 1