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

question 6

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:

Key Performance Indicator

A quantifiable metric that shows how successfully a business is meeting its primary goals.

SMART Objectives

Specific, Measurable, Achievable, Relevant, and Time-bound goals that provide clear direction and criteria for success.

Tracking

The process of monitoring and recording the behavior or movements of objects or people, often used in the context of data analysis and optimization.

ROI

Return on Investment, a financial metric used to evaluate the efficiency or profitability of an investment, calculated by dividing the net profit by the cost of the investment.