An Investment Company Currently Has 1 Million Dollars Available for Investment

question 43

Essay

An investment company currently has 1 million dollars available for investment in five different stocks.The company wants to maximize the interest earned over the next year.The five investment possibilities along with the expected interest earned are shown below.To manage risk,the investment firm wishes to have at least 35% of the investment in stocks A and B.Furthermore,no more than 15% of the investment may be in stock E.Model and solve this problem in Excel.
$$\begin{array} { l c } \text { Investment } & \text { Expected Interest Earned (\%) } \\ \text { Stock A } & 7 \\\text { Stock B } & 9 \\\text { Stock C } & 8 \\\text { Stock D } & 10 \\\text { Stock E } & 11\end{array}$$

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Definitions:

Third Party

An entity that is not directly involved in a transaction or agreement but may be affected by it or have an interest in it.

Obligee

The party in a contract who is entitled to receive a performance or service from another party (the obligor).

Donee Beneficiary

A donee beneficiary is someone who benefits from a contract in which the promisor agrees to give a gift or confer a benefit to the beneficiary.

Promisor

The party in a contract who has made a promise to perform an action or service for the other party, known as the promisee.