A financial advisor at Diehl Investments identified two companies that are likely candidates for a takeover in the near
Posted: Mon May 30, 2022 4:40 pm
A financial advisor at Diehl Investments identified two
companies that are likely candidates for a takeover in the near
future. Eastern Cable is a leading manufacturer of flexible cable
systems used in the construction industry, and ComSwitch is a new
firm specializing in digital switching systems. Eastern Cable is
currently trading for $40 per share, and ComSwitch is currently
trading for $25 per share. If the takeovers occur, the financial
advisor estimates that the price of Eastern Cable will go to $55
per share and ComSwitch will go to $43 per share. At this point in
time, the financial advisor has identified ComSwitch as the higher
risk alternative. Assume that a client indicated a willingness to
invest a maximum of $50,000 in the two companies. The client wants
to invest at least $15,000 in Eastern Cable and at least $10,000 in
ComSwitch. Because of the higher risk associated with ComSwitch,
the financial advisor has recommended that at most $25,000 should
be invested in ComSwitch.
Formulate a linear programming model that can be used to
determine the number of shares of Eastern Cable and the number of
shares of ComSwitch that will meet the investment constraints and
maximize the total return for the investment.
companies that are likely candidates for a takeover in the near
future. Eastern Cable is a leading manufacturer of flexible cable
systems used in the construction industry, and ComSwitch is a new
firm specializing in digital switching systems. Eastern Cable is
currently trading for $40 per share, and ComSwitch is currently
trading for $25 per share. If the takeovers occur, the financial
advisor estimates that the price of Eastern Cable will go to $55
per share and ComSwitch will go to $43 per share. At this point in
time, the financial advisor has identified ComSwitch as the higher
risk alternative. Assume that a client indicated a willingness to
invest a maximum of $50,000 in the two companies. The client wants
to invest at least $15,000 in Eastern Cable and at least $10,000 in
ComSwitch. Because of the higher risk associated with ComSwitch,
the financial advisor has recommended that at most $25,000 should
be invested in ComSwitch.
Formulate a linear programming model that can be used to
determine the number of shares of Eastern Cable and the number of
shares of ComSwitch that will meet the investment constraints and
maximize the total return for the investment.