Alan wants to invest a total of 21,000 in mutual funds and a certificate of deposit (CD). He wants to invest no more in mutual funds than half the amount he invests in the CD. His expected return on mutual funds is 8 and on the CD is 4.
How much money should Alan invest in each area in order to have the largest return on his investments? What is his maximum one-year return?
A) Maximum one-year return is 1680 when he invests 21,000 in mutual funds and 0 in the CD.
B) Maximum one-year return is 1120 when he invests 7000 in mutual funds and 14,000 in the CD.
C) Maximum one-year return is 4200 when he invests 14,000 in mutual funds and 7000 in the CD.
D) Maximum one-year return is 840 when he invests 0 in mutual funds and 21,000 in the CD.
Question 2
Determine whether the statement below is true or false. If it is false, give an explanation.
If the feasible set for a canonical linear programming problem is not empty, there must be at least one optimal solution.
A) True
B) False. The feasible set may contain only one point.
C) False. The objective function may have the same value for more than one extreme point of the feasible set.
D) False. The objective function may be unbounded.
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