Investment Manager Max Gaines Wishes to Develop a Mutual Fund

question 9

Essay

Investment manager Max Gaines wishes to develop a mutual fund portfolio based on the Markowitz portfolio model.He 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 4%.Formulate the appropriate nonlinear program.​
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Definitions:

Small Request

A minor or insignificant petition or appeal made to another individual, often as a precursor to asking for a larger favor in compliance theories.

Larger Request

A strategy in persuasion and social influence where a bigger, often less achievable, request is made knowing it could be refused in favor of a smaller one that is the real aim.

Self-perception Theory

A psychological theory that suggests individuals infer their own attitudes and emotional states by observing their own behavior and the context in which it occurs.

Inferences

The process of drawing logical conclusions from available information, premises, or evidence.