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An investor is considering allocating $10,000 among five investment alternatives. The five alternatives and their respective fund categories, risk levels, and average annual returns are

An investor is considering allocating $10,000 among five investment alternatives. The five alternatives and their respective fund categories, risk levels, and average annual returns are shown below:

Name of Fund Category of Fund Risk Level Average Annual Return
Adams Money Market Fund 1 4.50%
Barney Money Market Fund 2 5.62%
Chilton Bond Fund 3 6.80%
Dunster Bond Fund 3 10.15%
Excelsior Aggressive Growth Fund 5 15.60%

The risk level of each investment is rated on a scale of 1 to 5, where 1 is very conservative and 5 is very risky. The investor would like to maximize the average annual return on his investment subject to the following restrictions:

1. The average risk level of the entire investment should not exceed 2.5, the average here is a weighted average in terms of the amount of money invested in each fund.

2. 30%-35% of the investment should be placed in money market funds. In other words, you should invest at least 30% and at most 35% of the budget into the money market funds

3. At most $3,000 should be invested in the aggressive growth fund.

Construct and solve a linear optimization model to determine the optimal allocation of the investors money.

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