Inside traders company itc invests in various type of


Inside Traders Company (ITC) invests in various type of securities. The firm has $5 million for immediate investment and wants to maximize the interest earned over the next year. Four investment possibilities are presented in the following table. To further structure the portfolio, the board of directors has specified that at least 40% of the investment must be in corporate bonds and common stock. No more than 20% of the investment may be in real estate. Formulate the linear program. Be sure to solve with a spreadsheet. Investment Expected Interest Earned (%) Common bonds 8.5 Common stock 9.0 Gold certificates 10.0 Real estate 13.0 Hint: Let x1 = millions of $ invested in corporate bonds x2 = millions of $ invested in common stock x3 = millions of $ invested in gold certificates x4 = millions of $ invested in real estate.

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