Financial Planner Minnie Margin Wishes to Develop a Mutual Fund

question 6

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.​

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Definitions:

Investment Company Act of 1940

US federal legislation that regulates the organization of investment companies and the activities they engage in.

NAV (Net Asset Value)

The per-share value of a mutual fund or ETF, calculated by dividing the total value of all the securities in its portfolio, minus liabilities, by the number of shares outstanding.

Significant Premium

A significant premium refers to a large additional amount paid over the usual cost or value, often used in the context of acquisitions where the buyout price is well above the market price of a company's shares.

SEC Regulations

Rules and guidelines established by the Securities and Exchange Commission (SEC) to protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation.