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ject to the requirement that the annual income from the investment be a 1 Problem 3. Sensitivity questions 30 points D E
Posted: Thu Apr 28, 2022 1:44 pm
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- Ject To The Requirement That The Annual Income From The Investment Be A 1 Problem 3 Sensitivity Questions 30 Points D E 1 (72.69 KiB) Viewed 23 times
- Ject To The Requirement That The Annual Income From The Investment Be A 1 Problem 3 Sensitivity Questions 30 Points D E 2 (72.69 KiB) Viewed 23 times
ject to the requirement that the annual income from the investment be a 1 Problem 3. Sensitivity questions 30 points D E G 2 Innis Investments manages funds for a number of companies and wealthy clients. The H 3 investment strategy is tailored to each client's needs. For a new client Innis has been 4 authorized to invest up to $1.2 million in two investment funds: a stock fund and a money 5 market fund. Each unit of the stock fund costs $50 and provides an annual rate of return 6 of 4%. 7 8 The client wants to minimize nisk subject to the requirement that the annual income from 9 the investment be at least $60,000. According to Innisinsk measurement system, each 10 Unit invested in the stock fund has a risk index of 8 and each unit invested in money 11 market fand has a risk index of 3. The higher the risk index associated with the stock fund 12 simply indicates that it is the riskier investment. The dient also specified that at least 13 $300,000 be invested in the money market fund. 15 16 Let, S and M represent the number of units purchased in the stock und and money market respectively 17 Then the LP model: 18 19 Min. Risk 85+ 3M 20 5.1. 21 SOS 100M SS1,200,000 23 SS4M2 $60,000 23 100 M $300,000 24 S, MO 25 26 You can solve this modelosing SOLVER which is an extra 20 polots, if you failed to aniwer 021. 27 But to answer the following sensitivity questions, the model is already solved and the Answer and Sensitivity 28 Reports are generated. See these reports in the corresponding worksheets and 29 answer the following questions (of course give reasons for your answers) 30 3) What the optimum solution and what is the minimum risk of that solution? (10) 32 34 35 26 b) How much annual income will be earned by the portfolio of optimum allocation of funds is done (10pt 32 38 39 40 c) What is the marginal rhk added to the portfolo due to an extra invested? (10 pt) 41 42 43 44 d) wint decrease or increase the return of the minimum requirement for the money market is increased from $100,000 to $900.000 10pt Cher Model QL Sensitivity Problem Answer Report as Sentitivity Report