Investment Strategy to Meet Clients Needs. Recall the Innis Investments problem (Chapter 2. Problem 39). Letting
S = units purchased in the stock fund
M = units purchased in the money market fund
leads to the following formulation:
Min 8S + 3M
s.t.
50S + 100 is less or equal to 200,000 Funds available
5S + 4 is greater or equal to 60,000 Annual income
M is greater or equal to 3,000 Units is money market
S,M is greater or equal to 0
a. What is the optimal solution. and what is the minimum total risk?
b. Specify objective coefficient ranges.
c. How ual income will he earned by the portfolio?
d. What is the rate of return for the portfolio?
e. What is the dual salue for the funds available constraint?
f. What is the marginal rate of return on extra funds added to the portfolio’
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