CSUSM Investment Company has collected a total of $$3,000,000$ from students, staff, and faculty to

invest in $10$ mutual fund alternatives with the following diversification and operational restrictions:

$$ No more than $\%20$ of the total amount should be invested in any one fund.

$$ No investment lower than $$80,000$ should be made $($i$.$e$.,$ if a fund is chosen for investment, then at

least $$80,000$ should be invested in it$).$

$$ At least one fund should be chosen from each fund type.

$$ No more than two from Growth & Income funds.

$$ Investment in fund $5$ is conditional on investing in fund $10($you can invest in fund $5$ only if fund

$10$ is chosen for investment$).$

$$ The total amount invested in pure bond funds must be at least $50\%$ of the amount invested in

Growth funds.

Using the following expected returns, formulate and solve a model that will determine the investment

strategy that will maximize expected annual return. What assumptions have you made in your model?

How often would you expect to run your model?

Fund Fund Type Expected Return $(\%)$

$1$ Growth $5\mathrm{.}42$

$2$ Growth $6\mathrm{.}65$

$3$ Growth $6\mathrm{.}82$

$4$ Growth & Income $7\mathrm{.}10$

$5$ Growth & Income $7\mathrm{.}84$

$6$ Growth & Income $7\mathrm{.}23$

$7$ Stock & Bond $6\mathrm{.}35$

$8$ Stock & Bond $6\mathrm{.}95$

$9$ Bond $5\mathrm{.}2$

$10$ Bond $5\mathrm{.}4$