Chemical Bank Is Attempting to Determine Where Its Assets Should

question 89

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:

Organizational Behaviour

The study of how people interact within groups in a work environment to understand human aspects in workplaces.

Management

The process of effectively organizing, planning, leading, and controlling resources to achieve organizational objectives.

Bureaucracy

An organizational structure characterized by standardized procedure, hierarchical division, and detailed rules and regulations.

Max Weber

Was a German sociologist, philosopher, and political economist who is widely recognized for his significant contributions to the methodology of social science, his studies on bureaucracy, and his theories regarding the sociology of religion and capitalism.