Financial Planner Minnie Margin Wishes to Develop a Mutual Fund $\text { Annual Returns (Flanning Scenarios) }$

question 48

Essay

Financial planner Minnie Margin wishes to develop a mutual fund portfolio based on the Markowitz portfolio model. She needs to determine the proportion of the portfolio to invest in each of the five mutual funds listed below so that the variance of the portfolio is minimized subject to the constraint that the expected return of the portfolio be at least 5%. Formulate the appropriate nonlinear program. $\text { Annual Returns (Flanning Scenarios) }$
$\begin{array}{c|rrrr}\text { Mutual Fund } & \text { Year } 1 & \text { Year 2 } & \text { Year } 3 & \text { Year 4 }\\\hline \text { International Stock } & 22.37 & 26.73 & 4.86 & 2.17 \\\text { Large-Cap Value } & 15.48 & 19.64 & 11.50 & -5.25 \\\text { Mid-Cap Value } & 17.42 & 20.07 & -4.97 & -1.69 \\\text { Small-Cap Growth } & 23.18 & 12.36 & 3.25 & 3.81 \\\text { Short-Term Bond } & 9.26 & 8.81 & 6.15 & 4.04\end{array}$

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Definitions:

Need For Uniqueness

The drive or desire within individuals to distinguish themselves from others by acquiring or possessing unique characteristics, behaviors, or products.

Psychogenic Needs

Psychological desires or necessities that motivate individuals to act in certain ways, including need for recognition, esteem, and belonging.

Fine Arts

Creative art forms, such as painting, sculpture, dance, theater, and music, appreciated primarily for their beauty or emotional power.

Maslow's Theory

A hierarchy of human needs that posits individuals are motivated by the desire to satisfy specific tiers of need, from basic physiological ones up to self-actualization.