A Portfolio Manager in Charge of a Bank Portfolio Has

question 49

Essay

A portfolio manager in charge of a bank portfolio has $10 million to invest. The securities available for purchase, as well as their respective quality ratings, maturities, and yields, are shown in the table below:
The bank places the following policy limitations on the portfolio manager's actions:
1. Government and agency bonds must total at least $4 million.
2. The average quality of the portfolio cannot exceed 1.4 on the bank's quality scale. (Note that a low number on this scale means a high-quality bond.)
"3. The average years to maturity of the portfolio must not exceed 5 years.
Assuming that the objective of the portfolio manager is to maximize after-tax earnings and that the tax rate is 50%, formulate a linear program that can be used to determine how much money to invest in each type of bond."

---

Definitions:

Brand

represents the name, term, design, symbol, or any other feature that identifies one seller's goods or service as distinct from those of other sellers.

Cognitive Dissonance

the psychological discomfort experienced by an individual who holds two or more contradictory beliefs, ideas, or values at the same time.

Alternative Evaluation

The process by which consumers compare different products or brands to make purchasing decisions.

Problem Recognition

The initial stage in the consumer decision-making process, where the consumer identifies a need or problem that requires resolution.