How much is the return of investment

Assignment Help Managerial Accounting

Reference no: EM132745510

Problem - You are about to invest your entire saving of $200,000 in the stock market. The risk has to be minimized. How many stocks of each of the following 4 options should you buy with the following conditions:

	Stock: Ford Motor Co.	Stock: FTR	Mutual Fund	Magna
Price/Share	$8	$4	$10	$48
Return on Investment	6%	10%	3%	8%
Risk to lose	10%	20%	1%	6%

Number of shares you purchase must be a whole number.

The Return must be bigger than 7%.

The amount invested in Mutual Fund should be at most 90% of the amount invested in Ford & FTR combined.

The number of shares of Ford & FTR combined (not the amount) should be at most 10 times of number of shares of Magna.

Minimum investment in each stock or mutual fund should be 10% of the total saving.

Required -

1. How much is the return of investment?

2. Find all the Slacks & Surpluses - indicate which one is slack and which one is surplus?

3. What is the risk of the optimized solution? How much can we lose?

Reference no: EM132745510

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