Solve the following problems. Show the necessary steps clearly

1. A mutual fund company has cash resources of birr 200 million for investment in a diversified portfolio. Table below shows the opportunity available, their estimated yields, risk factors and term period of details.

Investment type	Annual yield (%)	Risk factor	Time period(years)
Bank deposit	9.5	0.02	6
Treasury notes	8.5	0.01	4
Corporate deposits	12.0	0.08	3
Blue chip stocks	15.0	0.25	5
Speculative stocks	32.5	0.45	3
Real estates	35.0	0.04	10

Formulatethe L.P. model to find the optimal portfolio that will maximize return, considering the following policy guidelines: (5pts)

1. All funds available may be invested
2. Weighted average period of at least 5 years should be the planning horizon
3. Weighted average risk factor must not exceed 0.20
4. Investment in real estate and speculative stocks together must not be more than 25% of the money invested