A trust officer at the Blacksburg National Bank needs to determine how to invest $150,000 in the following collection of bonds to maximize the annual return. Bond Annual Return Maturity Risk Tax Free A 9.5% Long High Yes B 8.0% Short Low Yes C 9.0% Long Low No D 9.0% Long High Yes E 9.0% Short High No The officer wants to invest at least 40% of the money in short-term issues and no more than 20% in high-risk issues. At least 25% of the funds should go in tax-free investments, and at least 45% of the total annual return should be tax free. Formulate the LP model for this problem. Create the spreadsheet model and use Solver to solve the problem.
A trust officer at the Blacksburg National Bank needs to determine how to invest $150,000 in the following collection of bonds to maximize the annual return. Bond Annual Return Maturity Risk Tax Free A 9.5% Long High Yes B 8.0% Short Low Yes C 9.0% Long Low No D 9.0% Long High Yes E 9.0% Short High No The officer wants to invest at least 40% of the money in short-term issues and no more than 20% in high-risk issues. At least 25% of the funds should go in tax-free investments, and at least 45% of the total annual return should be tax free. Formulate the LP model for this problem. Create the spreadsheet model and use Solver to solve the problem.
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter11: Simulation Models
Section11.5: Simulating Games Of Chance
Problem 36P: A martingale betting strategy works as follows. You begin with a certain amount of money and...
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A trust officer at the Blacksburg National Bank needs to determine how to invest $150,000 in the following collection of bonds to maximize the annual return.
Bond |
Annual Return |
Maturity |
Risk |
Tax Free |
A |
9.5% |
Long |
High |
Yes |
B |
8.0% |
Short |
Low |
Yes |
C |
9.0% |
Long |
Low |
No |
D |
9.0% |
Long |
High |
Yes |
E |
9.0% |
Short |
High |
No |
The officer wants to invest at least 40% of the money in short-term issues and no more than 20% in high-risk issues. At least 25% of the funds should go in tax-free investments, and at least 45% of the total annual return should be tax free.
- Formulate the LP model for this problem.
- Create the spreadsheet model and use Solver to solve the problem.
Note:-
- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism.
- Answer completely.
- You will get up vote for sure.
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