Chemical Bank Is Attempting to Determine Where Its Assets Should

question 60

Essay

Chemical Bank is attempting to determine where its assets should be invested during the current year. At present, $800,000 is available for investment in bonds, home loans, auto loans, and personal loans. The annual rate of return on each type of investment is known to be the following: bonds, 12%, home loans, 18%, auto loans, 15%, personal loans, 22%. To ensure that the banks portfolio is not too risky, the bank's investment manager has placed the following restrictions on the bank portfolio:
∙ No more than 30% of the total amount invested may be in personal loans.
∙ The amount invested in home loans cannot exceed the amount invested in auto loans.
∙ The amount invested in personal loans cannot exceed the amount invested in bonds.
Determine how the bank can maximize the annual return on its investment portfolio.

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Definitions:

Apical Meristems

Regions of rapidly dividing cells at the tips of roots and shoots, where most plant growth occurs.

Vascular Cambium

A layer of growth tissue in plants that produces new phloem and xylem cells, contributing to stem and root thickness.

Sclerenchyma Tissue

A type of plant tissue composed of thick-walled cells that provide structural support, commonly found in regions of the plant that are no longer elongating.

Secondary Growth

In plants, a growth pattern resulting in the thickening of stems and roots, primarily through the activity of the vascular cambium.