An Investor Has $80,000 to Invest in Three Stocks, Stock

question 8

Short Answer

An investor has $80,000 to invest in three stocks, stock A costs $100, stock B costs $120 and stock C costs $80. Each stock A has a risk factor of 8, each stock B has a risk factor of 10 and each stock C has a risk factor of 7. The investor believes that the sum of the risk factors for all stocks purchase should not exceed 6000. The projected annual growth rate for the three stocks are 9%, 13% and 8% respectively. The projected annual dividend income from these stocks are as follows: Stock A: $14/stock, Stock B: $15/stock, and Stock C: $20/stock. The investor desires an annual dividend income of $10,000. The investor has established the following goals in order of their importance:

(1) The investor believes that the budget cannot be exceeded. (d₁)
(2) The risk factor should not exceed the target amount of 6000. (d₂)
(3) The average annual growth rate in stock prices must be at least 10%. (d₃)
(4) The investor desires a dividend income of at least $10,000. (d₄)

-State the goal programming objective function.

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Definitions:

Supply

The total amount of a good or service available for purchase at any given price level in a given market.

Price

The amount of money required to purchase a good or service, determined by factors such as supply and demand, production costs, and market competition.

Coal Miners

Individuals and companies engaged in the extraction of coal from the earth.

Environmental Laws

Regulations and standards aimed at preserving and protecting the environment from harmful practices or pollutants, promoting sustainability.