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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
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 $55.000 to invest. B&R's investment advisor decides to recommend a portfolio consisting of two investment funds: an Intemet fund and a Blue Chip fund. The Internet fund has a projected annual return of 17%, while the Blue Chip fund has a projected annual return of 7%. The investment advisor requires that at most $30,000 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 a has a risk rating of 6 per thousand dollars invested. The Blue Chip fund has a risk rating of 4 per thousand dollars in ested. For example, $10,000 is invested in each of the two investment funds, B&R's risk rating for the portfolio would be 6(10) 4(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 220 (a) Formulate a linear programming model to find the best investment strategy for this client. Let I Intemet fund investment in thousands Chip fund investment in thousands Blue If required, round your answers to two decimal places. Max 0.17 0.07 st. 1 1 550 Available investment funds 1 300 Maximum investment in the internet fund S 2200 Maximum risk for a moderate investor LB (b) Build a spreadsheet model and solve the problem using Solver What is the recommended investment portfolio for this client? Internet Fund Blue Chip Fund What is the annual return for the portfolio
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