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A Financial Advisor Is About to Build an Investment Portfolio

Question 83

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A financial advisor is about to build an investment portfolio for a client who has $100,000 to invest.The four investments available are A,B,C,and D.Investment A will earn 4 percent and has a risk of two "points" per $1,000 invested.B earns 6 percent with 3 risk points;C earns 9 percent with 7 risk points;and D earns 11 percent with a risk of 8.The client has put the following conditions on the investments: A is to be no more than one-half of the total invested.A cannot be less than 20 percent of the total investment.D cannot be less than C.Total risk points must be at or below 1,000.
Let A be the amount invested in investment A,and define B,C,and D similarly.
Formulate the linear programming model.

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Maximize return = 0.04A + 0.06B + 0.09C ...

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