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. Annual yield (%) Risk Factor Time period ( years)Bank deposit9.50.026treasury notes8.50.014corporate deposits12.00.083blue chip stocks15.00.255speculative stocks32.50.453real estates35.00.0410Formulate the L.P. model to find the optimal portfolio that will maximize return, considering the following policy guidelines:i) All funds available may be investedii) Weighted average period of at least 5 years should be the planning horizoniii) Weighted average risk factor must not exceed 0.20iv) Investment in real estate and speculative stocks together must not be more than 25% of the money invested 1. A mutual fund company has cash resources of birr 200 million for investment in adiversified portfolio. Table below shows the opportunity available, their estimatedyields, risk factors and term period of details.Annual yield (%)Risk factorTime period(years)Bank depositTreasury notesCorporate depositsBlue chip stocksSpeculative stocksReal estates9.50.028.50.010.084312.015.032.50.250.4535.00.0410Formulate the L.P. model to find the optimal portfolio that will maximize return,considering the following policy guidelines:i)ii)iii)iv)All funds available may be investedWeighted average period of at least 5 years should be the planning horizonWeighted average risk factor must not exceed 0.20Investment in real estate and speculative stocks together must not be morethan 25% of the money invested

Linear programming (LP) model is a mathematical modelling technique used to help decision makers in…

Answered: A mutual fund company has cash…

Essentials of Business Analytics (MindTap Course List)

2nd Edition

ISBN:9781305627734

Author:Jeffrey D. Camm, James J. Cochran, Michael J. Fry, Jeffrey W. Ohlmann, David R. Anderson

Publisher:Jeffrey D. Camm, James J. Cochran, Michael J. Fry, Jeffrey W. Ohlmann, David R. Anderson

Chapter3: Data Visualization

Section: Chapter Questions

Problem 6P: The file MutualFunds contains a data set with information for 45 mutual funds that are part of the...

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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.

	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

Formulate the L.P. model to find the optimal portfolio that will maximize return, considering the following policy guidelines:

i) All funds available may be invested

ii) Weighted average period of at least 5 years should be the planning horizon

iii) Weighted average risk factor must not exceed 0.20

iv) Investment in real estate and speculative stocks together must not be more than 25% of the money invested

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.
Annual yield (%)
Risk factor
Time period(years)
Bank deposit
Treasury notes
Corporate deposits
Blue chip stocks
Speculative stocks
Real estates
9.5
0.02
8.5
0.01
0.08
4
3
12.0
15.0
32.5
0.25
0.45
35.0
0.04
10
Formulate the L.P. model to find the optimal portfolio that will maximize return,
considering the following policy guidelines:
i)
ii)
iii)
iv)
All funds available may be invested
Weighted average period of at least 5 years should be the planning horizon
Weighted average risk factor must not exceed 0.20
Investment in real estate and speculative stocks together must not be more
than 25% of the money invested

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