Maximize Profit: Investing $33K in Mutual Funds

  • Thread starter mtingt
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In summary: I put that in online and it said my Max return was wrong, is it because it said 5 years?even if it was 5 years, I multiplied the max return by 5 and it was still wrong? is it just me or something is wrong with the system?In summary, the investment broker should invest 20,000 in the Franklin Natural Resources fund and 13,000 in the Oppenheimer Developing Markets A fund to maximize her return.
  • #1
mtingt
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An investment broker wants to invest up to $ 33000 She can invest in two mutual funds based on their yearly average return for the 5 years ending December 31, 2009: the Franklin Natural Resources fund yielding 8% and the Oppenheimer Developing Markets A fund yielding 10% She wants to invest at least $8000 in the Franklin Natural Resources fund and no more than 13000 in the Oppenheimer Developing Markets A fund. How much should she invest in each type of fund to maximize her return?

I got the two maximizing points 20,000 and 13,000

and got $2900 for max return, and it said it was wrong, why was it wrong?
 
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  • #2
mtingt said:
An investment broker wants to invest up to $ 33000 She can invest in two mutual funds based on their yearly average return for the 5 years ending December 31, 2009: the Franklin Natural Resources fund yielding 8% and the Oppenheimer Developing Markets A fund yielding 10% She wants to invest at least $8000 in the Franklin Natural Resources fund and no more than 13000 in the Oppenheimer Developing Markets A fund. How much should she invest in each type of fund to maximize her return?

I got the two maximizing points 20,000 and 13,000

and got $2900 for max return, and it said it was wrong, why was it wrong?

It is not wrong.

However, your description of your solution is a bit wrong: you do not have two maximizing points, you just have the single point (F,O) = (20,13) (in $000s).

RGV
 
  • #3
ok thanks, I put that in online and it said my Max return was wrong, is it because it said 5 years?
even if it was 5 years, I multiplied the max return by 5 and it was still wrong?

is it just me or something is wrong with the system?
 
  • #4
The LP formulation is: let F = $000s invested in Franklin and O = $000s invested in Oppehheimer. then: the annual yield, in $000s is 80*F + 100*O, so:
max Z = 80*F + 100*O
st
F >= 8
O <= 13
O+F <= 33
O,F >= 0.

The optimal solution is F = 20, O = 13, giving Z = 2900. Then the only issue is whether or not to multiply the 2900 by 5. If some system is not accepting this solution that system is wrong or has bugs.

RGV
 

1. What are mutual funds?

Mutual funds are a type of investment where a group of investors pool their money together to buy a collection of stocks, bonds, and other securities. This allows individuals to own a small portion of a large portfolio, making it easier to diversify their investments.

2. How do mutual funds make a profit?

Mutual funds make a profit through the growth of the securities in their portfolio. As the value of the stocks and bonds held by the fund increases, so does the value of the fund itself. Additionally, mutual funds may also generate income through dividends and interest payments from the securities in their portfolio.

3. What factors should I consider when choosing mutual funds to invest in?

When choosing mutual funds, it is important to consider factors such as the fund's investment objectives, historical performance, fees and expenses, and risk level. It is also important to diversify your investments by choosing funds that cover different industries and types of securities.

4. Is investing $33K in mutual funds a good idea?

Investing $33K in mutual funds can be a good idea if it aligns with your overall financial goals and risk tolerance. It is important to do thorough research and consult with a financial advisor before making any investment decisions.

5. How can I maximize profit when investing in mutual funds?

To maximize profit when investing in mutual funds, it is important to have a long-term investment strategy, diversify your investments, and regularly review and adjust your portfolio. It is also important to understand the fees and expenses associated with the fund and consider tax implications when making investment decisions.

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