A financial advisor at diehl investments identified

Assignment Help Macroeconomics

Reference no: EM13847396

A financial advisor at Diehl Investments identified two companies that are likely candidates for a takeover in the near future. Eastern Cable is a leading manufacturer of flexible cable systems used in the construction industry, and ComSwitch is a new firm specializing in digital switching systems. Eastern Cable is currently trading at $40 per share, and ComSwitch is currently trading for $25 per share. If the takeovers occur, the financial advisor estimates that the price of Eastern Cable will go to $55 per share and ComSwitch will go to $43 per share. At this point in time, the financial advisor has identified ComSwitch as the higher risk alternative. Assume that a client indicated a willingness to invest a maximum of $50,000 in the two companies. The client wants to invest at least $15,000 in Eastern Cable and at least $10,000 in ComSwitch. Because of the higher risk associated with ComSwitch, the financial advisor has recommended that at most $25,000 should be invested in ComSwitch.

a. Formulate a linear programming model that can be used to determine the number of shares of Eastern Cable and the number of shares of ComSwitch that will meet the investment constraints and maximize the total return for investment.

b. Graph the feasible region.

c. Determine the coordinates of each extreme point.

d. Find the optimal solution.

Reference no: EM13847396

Questions Cloud

What are the economic theories of opportunity cost : What are the economic theories of opportunity cost, supply and demand of a resale store or non-profit organization?

Holding fixed his income and the price of food : 1. Mr. A spends all his income on food and housing. Holding fixed his income and the price of food, Mr. A spends more on food as housing becomes more expensive. How many of the following statements can we infer from this information alone?

How business use internet technology for electronic commerce : Describe how businesses use Internet technology for electronic commerce, communicating with employees, and working with business partners

Explain the theory that the market value : Explain the theory that the market value of all outstanding shares of stock is equal to the present value of all future earnings. The core of this theory has to do with the dividend theory.

A financial advisor at diehl investments identified : A financial advisor at Diehl Investments identified two companies that are likely candidates for a takeover in the near future. Eastern Cable is a leading manufacturer of flexible cable systems used in the construction industry, and ComSwitch is a ne..

Compaing the united states today with the united states : Compaing the United States today with the United States 200 years ago, what has happened to our production of market goods and services? What has happened to our production of goods and services outside the market, such as the provision of care withi..

How installing a dell sonicwall vpn server : A 'how to on installing a Dell SonicWall VPN server implementing a HTTPS tunnel. Implementing SSL/TLS, HTTPS, and SSH is a matter of configuring clients, servers, and network infrastructure

Discuss how utility based resource allocation operates : Critically discuss the possible challenges faced by SAHARA and managements responsibility in overcoming them - Critically discuss how utility based resource allocation operates in wireless networks and the reasons as to why it was successful within..

The difference between heat exhaustion and heat stroke : Explain the difference between heat exhaustion and heat stroke. What are the signs and symptoms of heat exhaustion and heat stroke.

User Account

All Pages