Chapter 4: Problem 24
$$ P=\left[\begin{array}{rrr} 1 & -1 & 2 \\ 1 & 2 & 0 \end{array}\right] $$
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Chapter 4: Problem 24
$$ P=\left[\begin{array}{rrr} 1 & -1 & 2 \\ 1 & 2 & 0 \end{array}\right] $$
These are the key concepts you need to understand to accurately answer the question.
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Investments Your friend's portfolio manager has suggested two energy stocks: Exxon Mobil (XOM) and British Petroleum (BP). XOM shares cost \(\$ 80\), yield \(2 \%\) in dividends, and have a risk index of \(2.5\). BP shares cost \(\$ 50\), yield \(7 \%\) in dividends, and have a risk index of \(4.5 .{ }^{19}\) Your friend has up to \(\$ 40,000\) to invest, and would like to earn at least \(\$ 1,400\) in dividends. How many shares (to the nearest tenth of a unit) of each stock should she purchase to meet your requirements and minimize the total risk index for your portfolio? What is the minimum total risk index?
$$ P=\left[\begin{array}{rrr} 1 & -1 & 2 \\ 1 & 2 & 0 \\ 0 & 1 & 1 \end{array}\right] $$
Music CD Sales Your music store's main competitor, Nuttal Hip Hop Classic Store, also wishes to stock at most 20,000 CDs, with at least half as many rap CDs as rock CDs and at least 2,000 classical CDs. It anticipates an average sale price of \(\$ 15 /\) rock CD, \$10/rap CD and \$10/classical CD. How many of each type of CD should it stock to get the maximum retail value, and what is the maximum retail value?
(Compare with the preceding exercise.) You are thinking of making your mansion more energy efficient by replacing some of the light bulbs with compact fluorescent bulbs, and insulating part or all of your exterior walls. Each compact fluorescent light bulb costs \(\$ 4\) and saves you an average of \(\$ 2\) per year in energy costs, and each square foot of wall insulation costs \(\$ 1\) and saves you an average of \(\$ 0.20\) per year in energy costs. \(^{13}\) Your mansion has 200 light fittings and 3,000 sq. ft. of uninsulated exterior wall. To impress your friends, you would like to spend as much as possible, but save no more than \(\$ 800\) per year in energy costs (you are proud of your large utility bills). How many compact fluorescent light bulbs and how many square feet of insulation should you purchase? How much will you save in energy costs per year?
$$ P=\left[\begin{array}{rrr} -1 & 1 & 2 \\ 2 & -1 & -2 \\ 1 & 2 & 0 \end{array}\right] $$
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