Financial planner Minnie Margin has a substantial number of clients who wish to own a mutual fund portfolio that matches, as a whole, the performance of the Russell 2000 index. Her 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 Russell 2000 index. Formulate the appropriate nonlinear program.
Definitions:
Monthly Payment
The specific amount of money paid each month, typically in the context of loans or leases.
Compounded Semi-annually
The process of calculating interest on both the initial principal and the accumulated interest from previous periods, applied twice a year.
Amortization Period
Refers to the total time taken to pay off a debt in regular installments until the loan amount and interest are paid in full.
Compounded Semi-annually
The method of determining interest by adding it to both the original amount of money deposited or borrowed and the interest that has already been added over two periods within a year.
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