An investor wishes to invest at most $14.5 million in a diversified portfolio. The types...
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Finance
An investor wishes to invest at most $14.5 million in a diversified portfolio. The types of investments, the associated anticipated return per year and the maximum as a proportion (%) of the portfolio to be considered are:
Investment
Anticipated return (%)
Max proportion (%)
Low-income Mortgage Loans
7.00
20
Conventional Mortgage Loans
6.25
60
Govt sponsored Mortgage Loans
8.25
25
Bond Investments
5.75
15
Stock Investments
8.75
15
Futures Trading
9.50
12
In addition, at least 20% of the investments are to be in instruments other than mortgages.
[6 marks] Formulate as an LP
[4 marks] Solve using Solver. Provide your final tableau showing the problem set up and the final solution.
[4 marks] How should the investment be diversified to make the most return?
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