MC1-002-I.pdf - MC1-002-I PORTFOLIO Original written by professor Pablo Pedro Melero Perlado at IE Business School Original version 14 January 1998 Last

MC1-002-I.pdf - MC1-002-I PORTFOLIO Original written by...

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1 MC1-002-I PORTFOLIO Original written by professor Pablo Pedro Melero Perlado at IE Business School. Original version, 14 January 1998. Last revised, 27 May 2008. Editado por IE Business Publishing. María de Molina 13, 28006 Madrid, Spain. ©1998 IE. Total or partial publication of this document without the express, written consent of IE is prohibited. Luis P. O’Rtfolio, manager of a bond portfolio, has 10 million dollars to invest. Table A shows the bonds available for investment. His target is to maximize after-tax profits, subject to the following limitations intended to diversify the risk: 1.- The total invested in municipal bonds must not exceed 3 million dollars. 2.- The average quality of the portfolio may not be less than 1.4 according to the bank’s quality
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