An investor is considering allocating 510,000 among five investment alternatives. The five alternatives and their respective fund categories, risk levels, and average annual returns are given in the data file.

The risk level of each investment is rated on a scale of 1 to 5, where 1 is very conservative and 5 is very risky. The investor would like to maximize the average annual return on his investment subject to the following restrictions;

1. The average risk level of the entire investment should not exceed r.

2. At least a% of the investment should be placed in money market funds.

3. At most Sb should be invested in the aggressive growth fund.

r, a, and b are also given in the data file.

Construct and solve a linear optimization model to determine the optimal allocation of the investor's money.

Please set total profit as your objective. Round off your optimal profit to two decimal places when submitting your solution online.

Data set:

Max average risk level allowed (r): 4

Min percentage placed in money market finds (a) 30

Max amount to invest in aggressive growth fund (b) 3000

Transcribed Image Text:

Name of Fund Category of Fund Risk Level Average Annual Return 4.00% Money Market Fund Money Market Fund Bond Fund 6.62% 7.30% Bond Fund 12.15% 23.30% ABCDE 12235 2 2 Aggressive Growth Fund 5 Name of Fund Category of Fund Risk Level Average Annual Return 4.00% Money Market Fund Money Market Fund Bond Fund 6.62% 7.30% Bond Fund 12.15% 23.30% ABCDE 12235 2 2 Aggressive Growth Fund 5

Answer rating: 100% (QA)

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