MATH 1324 - Linear Programming Bonus Quiz

Which of the following statements best describes the simplex method when applied to optimizing a portfolio in finance?

• A method that visually identifies the optimal portfolio mix.

• A trial-and-error method for finding the feasible investment region.

• An algorithm that systematically moves through portfolio options to find the optimal investment solution.

• A method that only works for portfolios with two types of assets.

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CCSS.HSA.CED.A.3

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Which of the following is the first step in formulating a linear programming problem for maximizing profit in a manufacturing business?

• Identify the decision variables such as the quantity of each product to produce.

• Construct the objective function to maximize total profit.

• Define the constraints such as resource limitations.

• Determine the non-negative restrictions for the production quantities.

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CCSS.HSA.CED.A.3

In optimizing a portfolio through linear programming, how do you identify the feasible region of investment options?

• It is the area outside the intersection of all constraint lines related to risk and return.

• It is the area within the intersection of all constraint lines related to risk and return.

• It is the area above the objective function line representing the desired level of return.

• It is the area below the objective function line representing the acceptable level of risk.

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CCSS.HSA.CED.A.3

CCSS.HSA.REI.D.12

What is a basic feasible solution in the context of optimizing a portfolio in finance?

• Any solution that satisfies all the investment constraints.

• The best solution that maximizes returns or minimizes risks.

• A solution that corresponds to an optimal mix of assets in the portfolio.

• A solution that does not violate any regulatory or risk constraints.

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CCSS.HSA.CED.A.3

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In the context of optimizing a portfolio in finance, what is the significance of corner points?

• They represent the only points where the portfolio's return can be maximized or minimized.

• They are used to construct the efficient frontier.

• They indicate investment options that are not binding.

• They represent possible portfolio allocations that are not optimal.

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CCSS.HSA.CED.A.3

How can linear programming be used to optimize portfolio selection in finance?

• By maximizing the return or minimizing the risk of a portfolio subject to certain constraints.

• By finding the average return of all possible investment portfolios.

• By eliminating all risk to find the best possible investment outcome.

• By assuming all investment returns are independent of each other.

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CCSS.HSA.CED.A.3

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In the context of financial planning for a startup, what is meant by non-negative restrictions?

• Constraints that require all budget items to be greater than a certain positive value.

• Constraints that prevent the financial balance from taking negative values.

• Constraints that require all budgetary decision variables to be non-negative.

• Constraints that limit the number of budget items that can take positive values.

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What does the feasible region represent in a business optimization problem involving linear programming?

• The set of all possible solutions that satisfy the profit maximization function.

• The set of all possible solutions that do not satisfy the budgetary constraints.

• The set of all possible solutions that satisfy the budgetary constraints.

• The optimal solution to the business optimization problem.

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CCSS.HSA.CED.A.3

CCSS.HSA.REI.D.12

Which of the following is true about the optimal investment strategy in portfolio management?

• It is always found at the center of the feasible region of investment options.

• It may occur at any point within the feasible region of investment options.

• It is always found at a corner point of the feasible region of investment options.

• It does not exist for all portfolio management scenarios.

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CCSS.HSA.CED.A.3

CCSS.HSA.REI.D.12

When applying the simplex method in optimizing a portfolio, what is the significance of the pivot element?

• It is used to eliminate assets from the portfolio optimization process.

• It determines the direction of movement towards the optimal portfolio mix.

• It is the element that is used to perform row operations to update the optimization tableau.

• It represents the maximum return the portfolio can achieve.

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