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Question: 16 financial analysts inc is an investment fim that manages...

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16. Financial Analysts, Inc, is an investment fim that manages stock portfolios for a number of clients. A new client is requesting that the firm handle an $80,000 portfolio. As an in- tial investment strategy, the client would like to restrict the portfolio to a mix of the follow ing two stocks: Stock Oil Alaska Southwest Petroleum Price/ Share $50 $30 Maximum Estimated Annual Return/Share $6 Possible Investment $50,000 $45000 Let x number of shares of Oil Alaska y = number of shares of Southwest Petroleum Develop the objective function, assuming that the client desires to maximize the total annual return. Show the mathematical expression for each of the following three constraints: (1) Total investment funds available are $80,000 (2) Maximum Oil Alaska investment is $50,000 (3) Maximum Southwest Petroleum investment is $45,000 a. b. Note: Adding the x20andy2 0 constraints provides a linear programming model for the investment problem. A solution procedure for this model will be discussed in Chapter 2. Bonus for Question 4: C. Solve the maximization problem, find the optimal number of shares so as to maximize the annual return given the constraints.

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