Question: 1 . A mutual fund manager is trying to decide on how to divide up $ 1 2 million between domestic and foreign stocks. Domestic

1. A mutual fund manager is trying to decide on how to divide up $12 million between domestic
and foreign stocks. Domestic stocks have been returning 11% per year and foreign 17%.
The fund manager wants to maximize the annual return from the investments. However the
manager also wants to be cautious. No more than $10 million of the fund should go into
domestic stocks and no more than $7 million into foreign. Also at least half as much should
be invested in foreign as domestic and at least half as much in domestic as foreign to maintain
some balance.
(a) Formulate a linear program to solve the problem.
(b) Draw the feasible region of the linear program and identify all the corner points of the
feasible region.
(c) Solve the linear program graphically.

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