A Mutual Fund Manager Must Decide How Much Money to Invest

question 10

Multiple Choice

A mutual fund manager must decide how much money to invest in Atlantic Oil (A) and how much to invest in Pacific Oil (P) .At least 60% of the money invested in the two oil companies must be in Pacific Oil.A correct modeling of this constraint is

• A)0.4A + 0.6P > 0.
• B)-0.4A + 0.6P > 0.
• C)0.6A + 0.4P > 0.
• D)-0.6A + 0.4P > 0.

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Definitions:

Maturity

The date on which the principal amount of a loan, bond, or other financial instrument is due to be paid in full.

Semi-Annual Interest

Interest payments made two times a year on a loan or investment.

Annual Interest

The amount of interest to be paid or earned over a year, often related to loans, savings, or investments.

Current Monetary Liability

A short-term financial obligation that is expected to be settled within a year using cash or other monetary resources.