Exhibit 7.2 The Following Questions Are Based on the Problem Below

question 9

Multiple Choice

Exhibit 7.2
The following questions are based on the problem below.
An investor has $150,000 to invest in investments A and B. Investment A requires a $10,000 minimum investment, pays a return of 12% and has a risk factor of .50. Investment B requires a $15,000 minimum investment, pays a return of 10% and has a risk factor of .20. The investor wants to maximize the return while minimizing the risk of the portfolio. The following multi-objective linear programming (MOLP) has been solved in Excel.
-Refer to Exhibit 7.2. What formula goes in cell B11?

• A) =SUMPRODUCT(B2:C2,$B$6:$C$6)/$D$7
• B) =B2*C2+B3*C3
• C) =SUMPRODUCT(B3:C3,$B$6:$C$6)/$D$7
• D) =SUMPRODUCT(B3:C3,$B$6:$C$6)

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Definitions:

Parameter

Numeric characteristic of a population.

Population

The entire aggregation of items or individuals from which samples can be drawn for statistical analysis.

Measure of Variability

A statistic that describes the degree to which scores in a distribution spread out or cluster together, such as range, variance, or standard deviation.

Statistic

A numerical measure that describes a characteristic of a sample derived from a larger population.