Discuss the below:
Joe is going to invest $250,000 in the development of new products. The new products have the following expected costs, yields, and degrees of risk.
Expected Expected Expected
Product Cost Yield Risk
A $100,000 0.20 8
B $50,000 0.10 4
C $50,000 0.15 10
D $150,000 0.10 0
Joe can do each product at its full cost or he may attempt a partial development and still expect a yield proportional to the level of expenditure on the product. Joe wants to limit his total weighted risk(degree of risk times budgeted amount) to 1000000 units; that is, an adopted plan for a $10000 expenditure with a degree of risk of 7 would be 70000 riskunits.
What should Joe invest to net the highest yield given his risk constraints?