(a)Formulate a linear programming model to find the best investment strategy for this client. (Assume N is the amount invested in the internet fund project and B is the amount invested in the Blue Chip fund. Express the amounts invested in thousands of dollars.)

Max ____________________

s.t.

Available investment funds __________________________

Maximum investment in the internet fund ____________________________

Maximum risk for a moderate investor _______________________________

N, B 0

In order to find the best investment strategy, the client should invest the maximum amount possible in the Internet fund while still staying within the maximum risk rating for a moderate investor. This can be represented by the following linear programming model:

Max 10N + 8B

s.t.

N + B 70

N 45

6N + 4B 340

N, B 0

(b) Build a spreadsheet model and solve the problem using Excel Solver. What is the recommended investment portfolio (in dollars) for this client?

internet fund ___________________

blue chip fund _________________

What is the annual return (in dollars) for the portfolio? __________________

The recommended investment portfolio for this client is $45,000 in the Internet fund and $25,000 in the Blue Chip fund. The annual return for the portfolio is 10% for the Internet fund and 8% for the Blue Chip fund, for a total return of 18%.

(c) Suppose that a second client with $70,000 to invest has been classified as an aggressive investor. B&R recommends that the maximum portfolio risk rating for an aggressive investor is 370. What is the recommended investment portfolio (in dollars) for the aggressive investor?

internet fund ___________________

blue chip fund _________________

The recommended investment portfolio for the aggressive investor is $70,000 in the Internet fund and $0 in the Blue Chip fund. The annual return for the portfolio is 10%.

(d) Suppose that a third client with $70,000 to invest has been classified as a conservative investor. B&R recommends that the maximum portfolio risk rating for a conservative investor is 260. Develop the recommended investment portfolio (in dollars) for the conservative investor.

internet fund _____________________

blue chip fund ____________________