Profit maximization equation

  • Thread starter rani0712
  • Start date
  • #1
1
0
Hey guys

I just came across this website i think its awsome..!!

Hope i can contribute tooo!

I had a question:

If a Share costs 3 dollars, and it doubles every 3 months
And nother share costs 1 dollar and doubles in One month

How many shares of each would you buy with 1000 dollars, to gain the most profits in 6 months>?
 

Answers and Replies

  • #2
HallsofIvy
Science Advisor
Homework Helper
41,833
961
If you invest x dollars in the first, it would be worth [itex](x/3)2^{n/4}[/itex] dollars in n years. If you invest x dollars in the second it would be worth [itex]x(2^{n/12}}[itex].
The ratio of those is
[tex]\frac{1}{3}2^{n/4-n/12}= \frac{1}{3}2^{n/6}[/tex]
For N= 6, that ratio is 2/3< 1. What does that tell you?
 
  • #3
4
0
Latex Image generator doesn't appear to be working so:

The first gives an annual ROI of:
(3*212/3)/3

The second gives an annual ROI of:
(1*212/1)/1

You want the maxmimum amount of shares of the one that gives the largest ROI for 6months.
 

Related Threads on Profit maximization equation

Replies
11
Views
83K
  • Last Post
Replies
2
Views
2K
Replies
5
Views
733
  • Last Post
Replies
16
Views
942
  • Last Post
Replies
8
Views
1K
  • Last Post
Replies
2
Views
1K
  • Last Post
Replies
1
Views
3K
  • Last Post
Replies
3
Views
2K
  • Last Post
Replies
1
Views
1K
Top