An Investor Wants to Invest $50,000 in Two Mutual Funds

question 44

Essay

An investor wants to invest $50,000 in two mutual funds, A and B. The rates of return, risks and minimum investment requirements for each fund are:
Note that a low Risk rating means a less risky investment. The investor wants to maximize the expected rate of return while minimizing his risk. Any money beyond the minimum investment requirements can be invested in either fund. The investor has found that the maximum possible expected rate of return is 11.4% and the minimum possible risk is 0.32.
The following Excel spreadsheet has been created to solve a goal programming problem with a MINIMAX objective based on the following goal programming formulation with MINIMAX objective and corresponding solution.
with solution (X₁, X₂) = (15,370, 34,630).
What values should go in cells B2:D14 of the spreadsheet?

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Definitions:

Masculinized

Made to possess or exhibit qualities traditionally associated with men or masculine traits.

Feminized

Made to possess qualities traditionally associated with females; often used in context of plants or animals, indicating induced development of female characteristics.

Testosterone

A steroid hormone primarily produced in the testicles of males and the ovaries of females, playing a key role in the development of male reproductive tissues and characteristics.

Estrogen

A group of hormones primarily responsible for the development and regulation of the female reproductive system and secondary sexual characteristics.