Linear Programming

[kbat88]

Can someone help me find the constraints for this problem??

Mr. Johnson would like to set up a trust fund for his 2 children. The trust fund has two investment options: 1. a bond fund 2. A stock fund. The projected returns over the life of the investments are 6% for the bond fund and 10% for the stock fund. To reduce the risk resulted from market volatility, he wants to invest at least 30% of the entire amount of trust fund in the bond fund. In addition, he wants to select a portfolio that will enable him to obtain a total return of at least 7.5%.

Is one of the constraints: B + S > .075 ???

This is tough for me---any help would be greatly appreciated.[/img]

 

[stapel]

What do "B" and "S" represent?

Thank you.

Eliz.

 

[kbat88]

B--Bonds
S--Stocks

 

[Denis]

Setting up a simple example always helps; assume $1000 total, with $300 = Bonds :

300(.06) + 700(.10) = 78 ; 78 / 1000 = .078, or 7.8%

That's helps to see that constraints are:
(.06B + .10S) / (B + S) >= .075
and
B / (B + S) >= .3

QUESTION: why are you calling that "linear programming" :?:

 

[stapel]

B--Bonds
S--Stocks

The number of bonds? The value of each bond? The total value of the bonds? The interest rate on the bonds?

What, exactly, do your variables stand for?

Thank you.

Eliz.