Investment Manager Max Gaines Has Several Clients Who Wish to Own

question 25

Essay

Investment manager Max Gaines has several clients who wish to own a mutual fund portfolio that matches, as a whole, the performance of the S&P 500 stock index. His task is to determine what proportion of the portfolio should be invested in each of the five mutual funds listed below so that the portfolio most closely mimics the performance of the S&P 500 index. Formulate the appropriate nonlinear program. $\text { Annual Returns (Flanning Scenarios) }$
$\begin{array}{c|rrrr}\text { Mutual Fund } & \text { Year } 1 & \text { Year 2 } & \text { Year } 3 & \text { Year 4 }\\\hline\text { International Stock } & 26.73 & 22.37 & 6.46 & -3.19 \\\text { Large-Cap Blend } & 18.61 & 14.88 & 10.52 & 5.25 \\\text { Mid-Cap Blend } & 18.04 & 19.45 & 15.91 & -1.94 \\\text { Small-Cap Blend } & 11.33 & 13.79 & -2.07 & 6.85 \\\text { Intermediate Bond } & 8.05 & 7.29 & 9.18 & 3.92 \\\hline \text { S\&P 500 Index } & 21.00 & 19.00 & 12.00 & 4.00\end{array}$

Understand the impact of information technology on the workplace and organizations.

Recognize the influence of risk, certainty, and uncertainty on decision making.

Understanding the conceptualization and three pillars of sustainable development from the 1992 Earth Summit.

Recognizing the importance of collaborative and stakeholder-focused implementation of international business sustainability guidelines.

---

Definitions:

Preferred Provider Organization

A type of health plan that contracts with medical providers, such as hospitals and doctors, to create a network of participating providers; you pay less if you use providers that belong to the plan’s network.

Health Care Organization

An institution that provides medical services, ranging from preventive care to treatment and management of illnesses and diseases.

Deductible

In insurance, it is the amount that must be paid out of pocket by the policyholder before an insurance provider will cover any expenses.

Copayment

A fixed amount paid by a patient for a covered healthcare service, with the remaining balance covered by their insurance.