## Question

###### An investor wants t0 invest S80,000 in two mutual funds, A and B. The rates of return; risks and minimum investment requirements for each fund are:FundRate of returnRiskMinimum investment S30,000 S20,00014 % 11 %0.6 0.4Note that a low risk rating means a less risky investment: The investor wants to maximize the expected rate of return while minimizing her risk. Any money beyond the minimum investment requirements must be invested in one of the funds (all S80,000 have to be invested) Assume that

An investor wants t0 invest S80,000 in two mutual funds, A and B. The rates of return; risks and minimum investment requirements for each fund are: Fund Rate of return Risk Minimum investment S30,000 S20,000 14 % 11 % 0.6 0.4 Note that a low risk rating means a less risky investment: The investor wants to maximize the expected rate of return while minimizing her risk. Any money beyond the minimum investment requirements must be invested in one of the funds (all S80,000 have to be invested) Assume that the risk of a portfolio is equal to the weighted average of the risks of the individual funds Find the investment policy that maximizes return_ What is the risk and return under this policy? Find the investment policy that minimizes risk What is the risk and return under this policy? Formulate a goal programming model with a MINIMAX objective function_ Assume that maximizing return and minimizing risk are equally important: