Question: 10. Recall the Innis Investments problem (Chapter 2. Problem 39). Letting S units purchased in the stock fund = units purchased in the money market

10. Recall the Innis Investments problem (Chapter 2. Problem 39). Letting S units purchased in the stock fund = units purchased in the money market fund M leads to the following formulation: Min 8S + 3M s.t. 505 + 100M $ 1,200,000 Funds available 5S + 4M 2 60,000 Annual income M > 3,000 Units in money market SMO AA Figure 3.16 The Solution for the Innis Investments Problem Optimal Objective Value 62000.00000 Variable Value Reduced Cost S M 4000.00000 10000.00000 0.00000 0.00000 Constraint Slack/Surplus Dual Value 1 2 3 0.00000 0.00000 7000.00000 -0.05667 2.16667 0.00000 Variable Objective Coefficient Allowable Increase Allowable Decrease S M 8.00000 3.00000 4.25000 Infinite Infinite 3.40000 Allowable Increase Constraint RHS Value Allowable Decrease 1 2 3 1200000.00000 60000.00000 3000.00000 300000.00000 42000.00000 7000.00000 420000.00000 12000.00000 Infinite a. What is the optimal solution, and what is the minimum total risk? b. Specify the objective coefficient ranges. c. How much annual income will be earned by the portfolio? d. What is the rate of return for the portfolio e. What is the dual value for the funds available constraint? f. What is the marginal rate of return on extra funde added

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