Question: Formulate a linear programming problem that can be used to solve the following question. Suppose for an investment no more than $10,000 is placed in
Formulate a linear programming problem that can be used to solve the following question.
Suppose for an investment no more than $10,000 is placed in three mutual funds with annual returns of 4%, 7%, and 12%, respectively. The investor requires an annual return of at least $750 and wishes to minimize the risk. The second mutual fund is twice as risky as the first, and the third is 4 times as risky as the first. How should the money be allocated to minimize the risk? Let risk = x1 + 2x2 + 4x3.
x1 = amount of money in dollars invested in the first fund x2 = amount of money in dollars invested in the second fund x3 = amount of money in dollars invested in the third fund
| ---Select--- Maximize Minimize | F = 0.4x+0.7y+0.12z | (objective function) |
| Subject to |
| (dollars available) |
|
| (total investment return) | |
Step by Step Solution
There are 3 Steps involved in it
Get step-by-step solutions from verified subject matter experts
