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Portfolio Management If x dollars are invested in a company that controls, say, 30% of the market with five brand-names, then 0.30x is a measure of market exposure and 5x is a measure of brand-name exposure. Now suppose you are a broker at a large securities firm, and one of your clients would like to invest up to $500,000 in recording industry stocks. You decide to recommend a combination of stocks in four of the world's largest recording companies: Warner Music, Universal Music, Sony, and EMI. (See the table.)+ Market Share Number of Labels (Brands) Warner Music Universal Music Sony EMI 20% 15% 12% 8 20% 20 10 15 You would like your client to maximize his total market exposure but limit his brand-name exposure to 7.5 million or less (representing an average of 15 labels or fewer per company), and still invest at least 20% of the total in Universa because you feel that its control of the DGG and Phillips labels is advantageous for its classical music operations. How much should you advise your client to invest in each company? (Let x = amount invested in Warner, y = amount invested in Universal, z = amount invested in Sony, and w= amount invested in EMI.) (x, y, z, w) =

Portfolio Management If x dollars are invested in a company that controls, say, 30% of the market with five brand-names, then 0.30x is a measure of market exposure and 5x is a measure of brand-name exposure. Now suppose you are a broker at a large securities firm, and one of your clients would like to invest up to $500,000 in recording industry stocks. You decide to recommend a combination of stocks in four of the world's largest recording companies: Warner Music, Universal Music, Sony, and EMI. (See the table.)+ Market Share Number of Labels (Brands) Warner Music Universal Music Sony EMI 20% 15% 12% 8 20% 20 10 15 You would like your client to maximize his total market exposure but limit his brand-name exposure to 7.5 million or less (representing an average of 15 labels or fewer per company), and still invest at least 20% of the total in Universa because you feel that its control of the DGG and Phillips labels is advantageous for its classical music operations. How much should you advise your client to invest in each company? (Let x = amount invested in Warner, y = amount invested in Universal, z = amount invested in Sony, and w= amount invested in EMI.) (x, y, z, w) =

Practical Management Science
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
Section: Chapter Questions
Problem 37P
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Portfolio Management If x dollars are invested in a company that controls, say, 30% of the market with five brand-names, then 0.30x is a measure of market exposure and 5x is a measure of brand-name exposure. Now suppose you are a broker at a large securities firm, and one of your clients would like to invest up to $500,000 in recording industry stocks. You decide to recommend a combination of stocks in four of the world's largest recording companies: Warner Music, Universal Music, Sony, and EMI. (See the table.)+ Market Share Number of Labels (Brands) Warner Music 12% 8 Universal Music 20% 20 Sony EMI 20% 10 15% 15 You would like your client to maximize his total market exposure but limit his brand-name exposure to 7.5 million or less (representing an average of 15 labels or fewer per company), and still invest at least 20% of the total in Universal because you feel that its control of the DGG and Phillips labels is advantageous for its classical music operations. How much should you advise your client to invest in each company? (Let x = amount invested in Warner, y = amount invested in Universal, z = amount invested in Sony, and w = amount invested in EMI.) (x, y, z, w) =
Transcribed Image Text:Portfolio Management If x dollars are invested in a company that controls, say, 30% of the market with five brand-names, then 0.30x is a measure of market exposure and 5x is a measure of brand-name exposure. Now suppose you are a broker at a large securities firm, and one of your clients would like to invest up to $500,000 in recording industry stocks. You decide to recommend a combination of stocks in four of the world's largest recording companies: Warner Music, Universal Music, Sony, and EMI. (See the table.)+ Market Share Number of Labels (Brands) Warner Music 12% 8 Universal Music 20% 20 Sony EMI 20% 10 15% 15 You would like your client to maximize his total market exposure but limit his brand-name exposure to 7.5 million or less (representing an average of 15 labels or fewer per company), and still invest at least 20% of the total in Universal because you feel that its control of the DGG and Phillips labels is advantageous for its classical music operations. How much should you advise your client to invest in each company? (Let x = amount invested in Warner, y = amount invested in Universal, z = amount invested in Sony, and w = amount invested in EMI.) (x, y, z, w) =
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