Blair & Rosen, Inc. (B&R) is a brokerage firm that specializes in investment portfolios designed to meet the specific risk tolerances of its clients. A client who contacted B&R this past week has a maximum of $50,000 to invest. B&R's investment advisor decides to recommend a portfolio consisting of two investment funds: an Internet fund and a Blue Chip fund. The Internet fund has a projected annual return of 14%, while the Blue Chip fund has a projected annual return of 7%. The investment advisor requires that at most $35,000 of the client's funds should be invested in the Internet fund. B&R services include a risk rating for each investment alternative. The Internet fund, which is the more risky of the two investment alternatives, has a risk rating of 5 per thousand dollars invested. The Blue Chip fund has a risk rating of 5 per thousand dollars invested. For example, if $10,000 is invested in each of the two investment funds, B&R's risk rating for the portfolio would be 5(10) + 5(10) = 100. Finally, B&R developed a questionnaire to measure each client's risk tolerance. Based on the responses, each client is classified as a conservative, moderate, or aggressive investor. Suppose that the questionnaire results classified the current client as a moderate investor. B&R recommends that a client who is a moderate investor limit his or her portfolio to a maximum risk rating of 240.

Problem 11-3 Blair & Rosen, Inc. (B&R) is a brokerage firm that specializes in investment portfolios designed to meet the specific risk tolerances of its clients. A client who contacted B&R this past week has a maximum of $50,000 to invest. B&R's investment advisor decides to recommend a portfolio consisting of two investment funds: an Internet fund and a Blue Chip fund. The Internet fund has a projected annual return of 14%, while the Blue Chip fund has a projected annual return of 7%. The investment advisor requires that at most $35,000 of the client's funds should be invested in the Internet fund. B&R services include a risk rating for each investment alternative. The Internet fund, which is the more risky of the two investment alternatives, has a risk rating of 5 per thousand dollars invested. The Blue Chip fund has a risk rating of 5 per thousand dollars invested. For example, if $10,000 is invested in each of the two investment funds, B&R's risk rating for the portfolio would be 5(10) + 5(10)-100. Finally, B&R developed a questionnaire to measure each client's risk tolerance. Based on the responses, each client is classified as a conservative, moderate, or aggressive investor. Suppose that the questionnaire results classified the current client as a moderate investor. B&R recommends that a client who is a moderate investor limit his or her portfolio to a maximunm risk rating of 240 (a) Formulate a linear programming model to find the best investment strategy for this client. Let IInternet fund investment in thousands B = Blue Chip fund investment in thousands If required, round your answers to two decimal places 18 Max 08 Available investment funds 50 35Maximum investment in the internet fund Maximum risk for a moderate investor 240 0 - Select your answer (b) Build a spreadsheet model and solve the problem using Solver. What is the recommended investment portfolio for this client? Internet Fund 25000 Blue Chip Fund21000 What is the annual return for the portfolio? 6180 (c) Suppose that a second client with $50,000 to invest has been classified as an aggressive investor. B&R recommends that the maximum portfolio risk rating for an aggressive investor is 340. What is the recommended investment portfolio for this aggressive investor? 35000 Internet Fund Chip Fund- 15000 6500 Blue Chip Fund15000 Annual Return (d) Suppose that a third client with $50,000 to invest has been classified as a conservative investor. B&R recommends that the maximum portfolio risk rating for a conservative investor is 150. Develop the recommended investment portfolio for the conservative investor Internet Fund Blue Chip Fund=$ 5000 Annual Return = 25000 4900 Problem 11-3 Blair & Rosen, Inc. (B&R) is a brokerage firm that specializes in investment portfolios designed to meet the specific risk tolerances of its clients. A client who contacted B&R this past week has a maximum of $50,000 to invest. B&R's investment advisor decides to recommend a portfolio consisting of two investment funds: an Internet fund and a Blue Chip fund. The Internet fund has a projected annual return of 14%, while the Blue Chip fund has a projected annual return of 7%. The investment advisor requires that at most $35,000 of the client's funds should be invested in the Internet fund. B&R services include a risk rating for each investment alternative. The Internet fund, which is the more risky of the two investment alternatives, has a risk rating of 5 per thousand dollars invested. The Blue Chip fund has a risk rating of 5 per thousand dollars invested. For example, if $10,000 is invested in each of the two investment funds, B&R's risk rating for the portfolio would be 5(10) + 5(10)-100. Finally, B&R developed a questionnaire to measure each client's risk tolerance. Based on the responses, each client is classified as a conservative, moderate, or aggressive investor. Suppose that the questionnaire results classified the current client as a moderate investor. B&R recommends that a client who is a moderate investor limit his or her portfolio to a maximunm risk rating of 240 (a) Formulate a linear programming model to find the best investment strategy for this client. Let IInternet fund investment in thousands B = Blue Chip fund investment in thousands If required, round your answers to two decimal places 18 Max 08 Available investment funds 50 35Maximum investment in the internet fund Maximum risk for a moderate investor 240 0 - Select your answer (b) Build a spreadsheet model and solve the problem using Solver. What is the recommended investment portfolio for this client? Internet Fund 25000 Blue Chip Fund21000 What is the annual return for the portfolio? 6180 (c) Suppose that a second client with $50,000 to invest has been classified as an aggressive investor. B&R recommends that the maximum portfolio risk rating for an aggressive investor is 340. What is the recommended investment portfolio for this aggressive investor? 35000 Internet Fund Chip Fund- 15000 6500 Blue Chip Fund15000 Annual Return (d) Suppose that a third client with $50,000 to invest has been classified as a conservative investor. B&R recommends that the maximum portfolio risk rating for a conservative investor is 150. Develop the recommended investment portfolio for the conservative investor Internet Fund Blue Chip Fund=$ 5000 Annual Return = 25000 4900