(Investment decision problem) The Heinlein and Krampf Brokerage firm has just be
ID: 2805507 • Letter: #
Question
(Investment decision problem) The Heinlein and Krampf Brokerage firm has just been instructed by one of its clients to invest $250,000 of her money obtained recently through the sale of land holdings in Ohio. The client has a good deal of trust in the in- vestment house, but she also has her own ideas about the distribution of the funds being invested. In par- ticular, she requests that the firm select whatever stocks and bonds they believe are well within the following guidelines: (a) Municipal bonds should constitute at least 20% but of the investment. (b) At least 40% of the funds should be placed in a combination of electronic firms, aerospace firms, and drug manufacturers. (c) No more than 50% of the amount invested in municipal bonds should be placed in a high-risk, high-yield nursing home stock. Subject to these restraints, the client's goal is to max- imize projected return on investments. The analysts at Heinlein and Krampf, aware of these guidelines,Explanation / Answer
Total Investment 250000 $ It Constitute 1)Municiple bonds 50000 $ 20% 2)Combination of Electronic firms, aerospace firms,and Drug manufacturures 100000 $ 40% 3)Municiple Bonds placed in High risk High yield Nursing home 100000 $ 40% Total 250000 $
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