In a Portfolio Problem, X1, X2, and X3 Represent the Number

question 40

Multiple Choice

In a portfolio problem, X1, X2, and X3 represent the number of shares purchased of stocks 1, 2, and 3, which have selling prices of $15, $47.25, and $110, respectively. The investor has up to $50,000 to invest.
-The stockbroker suggests limiting the investments so that no more than $10,000 is invested in stock 2 or the total number of shares of stocks 2 and 3 does not exceed 350, whichever is more restrictive. How would this be formulated as a linear programming constraint?

• A)
• \(\begin{array} { l }
• X _ { 2 } \leq 10000 \\
• X _ { 2 } + X _ { 3 } \leq 350
• \end{array}\)
• B) 10,000 X2 ? 350X2 + 350X3
• C)
• \(\begin{array} { l }
• 47.25 \mathrm { X } _ { 2 } \leq 10,000 \\
• \mathrm { X } _ { 2 } + \mathrm { X } _ { 3 } \leq 350
• \end{array}\)
• D)
• \(\begin{array} { l }
• 47.25 \mathrm { X } _ { 2 } \leq 10,000 \\
• 47.25 \mathrm { X } _ { 2 } + 110 \mathrm { X } _ { 3 } \leq 350
• \end{array}\)

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Definitions:

Marginal Analysis

An examination of the additional benefits of an activity compared to the additional costs incurred by that same activity.

Additional Costs

Expenses that are not initially planned or anticipated, which can arise during the course of a project or as part of an operation.

Economic Models

Simplified representations of complex economic processes used to predict future economic activity.

Simplifying Assumptions

Rational approximations or conditions made to simplify complex systems or models so that they are easier to analyze or understand.