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Bill Cooper is an investment advisor specializing in making recommendations to new investors. Sue, a new client for Bill, has just inherited $100,000, which she
Bill Cooper is an investment advisor specializing in making recommendations to new investors. Sue, a new client for Bill, has just inherited $100,000, which she wishes to invest all in a portfolio. Bill has found Sue to be quite risk averse, and has selected the following group of assets for potential investment. Potential Investments Expected Rating Liquidity Risk Factor Return (%) Analysis Savings 4 A Immediate per dollar 0 Certificate of deposit 5.2 B+ 5-Year 0.02 Western Mining Bond 6.5 A 1-Year 0.15 Royal REIT 10 B Immediate 0.30 Based on their meeting, Bill has been able to develop the following portfolio requirements for Sue: an expected return of at least 7.5%, at least 40% of the inheritance in A-rated investments, at least 40% in investments with expected return of more than 6%, at least 40% in investments with risk factor per dollar less than 0.05. Decision Variables: S=$ amount invested in Saving C = $ amount invested in Certificate of deposit W = S amount invested in Western Mining Bond R=$ amount invested in Royal REIT Which of the following is NOT a constraint in the LP formulation? O4%S +5.2%C+6.5%W + 10%R >= 7,500 OS + C >= 40,000 OS+W >= 40,000 OW+R >= 40,000 O S+R >= 40,000
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