Table 8-7 Ivana Myrocle Wishes to Invest Her Inheritance of $200,000 So

question 30

Multiple Choice

Table 8-7
Ivana Myrocle wishes to invest her inheritance of $200,000 so that her return on investment is maximized,but she also wishes to keep her risk level relatively low.She has decided to invest her money in any of three possible ways: CDs,which pay a guaranteed 6 percent;stocks,which have an expected return of 13 percent;and a money market mutual fund,which is expected to return 8 percent.She has decided that any or all of the $200,000 may be invested,but any part (or all) of it may be put in any of the 3 alternatives.Thus,she may have some money invested in all three alternatives.In formulating this as a linear programming problem,define the variables as follows:
C = dollars invested in CDs
S = dollars invested in stocks
M = dollars invested in the money market mutual fund
-According to Table 8-7,which describes an investment problem,which of the following would be the most appropriate constraint in the linear programming problem?

• A)0.06C + 0.13S + 0.08M ≤ 200000
• B)C + S + M ≥ 200000
• C)C + S + M ≤ 200000
• D)C + S + M = 200000
• E)None of the above

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Definitions:

Two-Way Tables

A type of table used in statistics to display data collected from two categorical variables.

Alternative Hypothesis

A statement in hypothesis testing that proposes there is a statistically significant difference or effect, in contrast to the null hypothesis.

Chi-square Test

A statistical assessment designed to ascertain whether a notable relationship exists between two variables of categorical nature.

Association

A relationship or connection between two or more variables, where changes in one variable may be related to changes in another, though not necessarily causally.