Q1. Formulate this portfolio selection problem by using LP and solve it by using Excel.

A brokerage firm has been tasked with investing $500,000 for a new client. The client has asked that the broker select promising stocks and bonds for investment, subject to the following guidelines:

-At least 20% in municipal bonds

-At least 10% each in real estate stock and pharmaceutical stock

-At least 40% in a combination of energy and domestic automobile stocks, with each accounting for at least 15%

-No more than 50% of the total amount invested in energy and automobile stocks in a combination of real estate and pharmaceutical company stock Subject to these constraints, the client's goal is to maximize projected return on investments. The broker has prepared a list of high-quality stocks and bonds and their corresponding rates of return, as shown in the following

table.

Investment

Annual Rate of Return

City of Miami (municipal) bonds

5.3%

American Smart Car

8.8%

GreenEarth Energy

4.9%

Rosslyn Pharmaceuticals

8.4%

RealCo (real estate)

10.4%

Q1. Formulate this portfolio selection problem by using LP and solve it by using Excel.