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:

Real-life Situations

Scenarios or circumstances encountered in everyday life, outside of controlled or artificial environments.

Role Model

An individual admired for their qualities or achievements and regarded as an example to be imitated.

Emulate

Attempting to match or surpass someone or something by imitation or to replicate their success as a model.

Decision

The act of making a choice among available alternatives, often considered within the context of problem-solving or therapy.