7-37 Bbavika Investments, a group of financial advisors and retirementplanners, is providing advice on how to invest $200,000 for one of itsclients in the stock market and in money market funds. Each dollarinvested in the stock market gives a return of 10%, and each dollarinvested in money market funds gives a return of 5%. However, there isrisk involved: the risk measure for each dollar invested in the stock marketis 12, and the risk measure for each dollar invested in the money market is5. The table below summarizes the information just presented.Risk measurePercentage return perper investment dollarinvestment dollarStock market1210%Money market5%The client has stipulated an annual return of at least $14,000 on hisinvestments in the stock market and money market. Formulate a linearprogramming model for this situation that will minimize the risk ofinvesting and solve it to find out how much should be invested in eachmarket.

Decision Variable: Let, S be the dollars invested in the stock market M be the dollars invested in…

7-37 Bbavika Investments, a group of financial advisors and retirement planners, is providing advice on how to invest $200,000 for one of its clients in the stock market and in money market funds. Each dollar invested in the stock market gives a return of 10%, and each dollar invested in money market funds gives a return of 5%. However, there is risk involved: the risk measure for each dollar invested in the stock market

7-37 Bbavika Investments, a group of financial advisors and retirement planners, is providing advice on how to invest $200,000 for one of its clients in the stock market and in money market funds. Each dollar invested in the stock market gives a return of 10%, and each dollar invested in money market funds gives a return of 5%. However, there is risk involved: the risk measure for each dollar invested in the stock market

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter4: Linear Programming Models

Section4.7: Financial Models

Problem 31P

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