In portfolio problem, X1, X2, and X3 represent the number of shares bought of stocks 1, 2, an 3 which have selling prices of $15, $47.25, and $110, respectively. The investor has up to $50,000 to invest. The expected returns on the investment of the three stocks are 6%, 8%, and 11%. An appropriate objective function is
Answer
MAX .06X1 +.08X2 +.11X3
MAX .06(15)X1 +.08(47.25)X2 +.11(110)X3
MAX 15X1 + 47.25X2 +.110X3
MAX (1/.06)X1 +.(1/08)X2 + (1/.11)X3