Formulate but Do Not Solve the Following Exercise as a Linear

question 175

Multiple Choice

Formulate but do not solve the following exercise as a linear programming problem. A financier plans to invest up to $5 million in three projects. She estimates that project A will yield a return of 11% on her investment, project B will yield a return of 16% on her investment, and project C will yield a return of 23% on her investment. Because of the risks associated with the investments, she decided to put not more than 40% of her total investment in project C. She also decided that her investments in projects B and C should not exceed 70% of her total investment. Finally, she decided that her investment in project A should be at least 70% of her investments in projects B and C. How much should the financier invest in each project if she wishes to maximize the total returns on her investments?

• A) Maximize: Subject to:
• B) Maximize: Subject to:
• C) Maximize: Subject to:
• D) Maximize: Subject to:

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Definitions:

Expected Payoff

Expected payoff is the anticipated value of an investment or decision under uncertainty, calculated as the weighted average of its possible outcomes.

Nash Equilibrium

A concept in game theory where each player's strategy is optimal, considering the strategies of other players, and no player has anything to gain by changing only their own strategy.

Pure Strategies

In game theory, a strategy where a player consistently follows a specific action or plan whenever a particular situation arises.

Dominant Strategy

In game theory, a strategy that is the best for a player to follow, regardless of the strategies chosen by other players.