Referring to the Texas Lotto situation in Problem 7-20 suppose the investor has changed his attitude about

Question:

Referring to the Texas Lotto situation in Problem 7-20 suppose the investor has changed his attitude about the investment and wishes to give greater emphasis to the risk of the investment. Now the investor wishes to minimize the risk of the investment as long as a return of at least 8% is generated. Formulate this as an LP problem and find the optimal solution. How much should be invested in each stock? What is the average risk for this investment? What is the estimated return for this investment?

In Problem 7-20, A winner of the Texas Lotto has decided to invest $ 50,000 per year in the stock market. Under consideration are stocks for a petrochemical firm and a public utility. Although a long- range goal is to get the highest possible return, some consideration is given to the risk involved with the stocks. A risk index on a scale of 1â€“10 (with 10 being the most risky) is assigned to each of the two stocks. The total risk of the portfolio is found by multiplying the risk of each stock by the dollars invested in that stock. The following table provides a summary of the return andrisk:

Stocks
Stocks or shares are generally equity instruments that provide the largest source of raising funds in any public or private listed company's. The instruments are issued on a stock exchange from where a large number of general public who are willing... Portfolio
A portfolio is a grouping of financial assets such as stocks, bonds, commodities, currencies and cash equivalents, as well as their fund counterparts, including mutual, exchange-traded and closed funds. A portfolio can also consist of non-publicly...