Linear Programming and Its Application Techniques in Optimizing Portfolio Selection of a Firm
Autor: | Abimbola Abolarinwa, N. K. Oladejo, S.O. Salawu |
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Jazyk: | angličtina |
Rok vydání: | 2020 |
Předmět: |
Fixed deposit
Linear programming Article Subject Applied Mathematics media_common.quotation_subject Financial risk 010103 numerical & computational mathematics 01 natural sciences Certificate of deposit Interest rate Treasury 010101 applied mathematics Return on investment Econometrics QA1-939 Portfolio Business 0101 mathematics Mathematics media_common |
Zdroj: | Journal of Applied Mathematics, Vol 2020 (2020) |
ISSN: | 1110-757X |
DOI: | 10.1155/2020/8817909 |
Popis: | Optimization techniques have been used in this paper to obtain an optimal investment in a selected portfolio that gives maximum returns with minimal inputs based on the secondary data supplied by a particular firm that is examined. Sensitivity analysis is done to ascertain the robustness of the resulting model towards the changes in input parameters to determine a redundant constraint using linear programming. The challenge of determining the available funds and allocating each component of the portfolio to maximize returns and minimize inputs by portfolio holders and managers who are the major decision-makers in allocating their resources cannot be quantified. This optimization technique is used to obtain an optimal investment portfolio including financial risks of a firm with disposable of $15,000,000.00 invested in crude oil, mortgage securities, cash crop, certificate of deposit, fixed deposit, treasury bills, and construction loans. The model is a single-objective model that maximizes the return on the portfolio as the interests on the original data reduces by 5%; then, the return on investments also reduced by almost 15%, with the quantum of money on treasury bills and construction loans posing a significant reduction for the maximum return. The investment in the other options saw a slight decrease. Also, as the interest rates of the original data increase by 5%, the return on investments also grows by almost 17% while the quantum of money on the treasury bills and construction loans increases, and the quantum of money on the other options experienced a decrease except for mortgage securities which recorded a slight increase. |
Databáze: | OpenAIRE |
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