Annual income will this investment strategy generate

Assignment Help Other Subject

Reference no: EM13318324

Innis Investments manages funds for a number of companies and wealthy clients. The investment strategy is tailored to each client's needs. For a new client, Innis has been authorized to invest up to 1.2 million in two investment funds: a stock fund and a money market fund. Each unit of the stock fund cost $50 and provides an annual rate of return of 10%; each unit of the money market fund cost $100 and provides an annual rate of return of 4%.

The client wants to minimize risk subject to the requirement that the annual income from the investment be at least $60,000 according to Innis's risk measurement system, each unit invested in the stock fund has a risk index of 8, and each unit invested in the money market fund has a risk index of 3. the higher the risk index associated with the stock fund simply indicates that the riskier investment. Innis's client also specified that at least $300,000 be invested in the money market fund.

a. Determine how many units of each fund Innis should purchase for the client to minimize the total risk index for the portfolio.

b. How much annual income will this investment strategy generate?

c. suppose the client desires to maximize annual return. How should the funds be invested?

Reference no: EM13318324

Questions Cloud

Explain what is the ratio of the root mean square : The two isotopes of uranium, U-235 and U-238 can be separated by effusion of the corresponding UF6 gasses. What is the ratio of the root mean square speed 238-UF6 to that of 235-UF6

Financial instrument is a debt or equity security : Discuss five factors that may be employed to determine if a particular financial instrument is a debt or equity security.

Determine what will the dimensions of the basin be : A rectangular sedimentation basin will have a flow of 1.0 mgd using a 2:1 legth/width ratio, and overflow rate of 0.00077 fps, and a detention time of 3.0 hr. What will the dimensions of the basin be

Explain what is its molar mass : A sample of gas weighs 4.542 grams and has a volume of 870.0 mL at 945.0 torr and 39.0 degrees Celsius. What is its molar mass

Annual income will this investment strategy generate : Innis Investments manages funds for a number of companies and wealthy clients. The investment strategy is tailored to each client's needs. For a new client, Innis has been authorized to invest up to 1.2 million in two investment funds: a stock fund a..

What is the value of the magnetic field at a distance r : The central conductor and the conducting tube carry equal currents of I = 1.05A in opposite directions. The currents are distributed uniformly over the cross sections of each conductor. What is the value of the magnetic field at a distance r = 5.4..

What are some challenges to traditional policing : What are some challenges to traditional policing? How might some of these challenges be related to gender and race issues? How do these challenges increase stress and burnout in law enforcement?

Analyze the overlap graphs of the voice packet : Analyze the overlap graphs of the Voice Packet End-to-End Delay and Voice Packet Delay Variation graphs. Compare the three queuing disciplines and explain their effect on the performance of the three applications.

Evaluate the ph of the solution formed by the addition : Calculate the pH of the solution formed by the addition of 55.5 mL of 0.100 M NaOH to 49.2 mL of 0.100 M H3PO4.

User Account

All Pages