Given the current economic situation, a client of a retirement fund company wishes to revisit her portfolio. She wants to invest $100,000, and has selected six potential bonds to invest in. Each bond has different characteristics (return rate, maturity (in years), and rating), as indicated the following table. Bondi Bond2 Bond3 Bond4 Bond5 Bond6 Years to Return Maturity 8.50% 10 7.50% 12 9.50% 7 8.00% 11 10.00% 8 9.00% 9 Rating 1 (excellent) 1 (excellent) 3 (good) 2 (very good) 4 (fair) 3 (good) The goal of the client is to maximize total return. However, she imposes the following restrictions to have a more balanced portfolio. First, we can spend no more than 30% of the total amount of money in a single bond. Second, at least 50% of the total amount of money must be invested in long-term bonds, having maturity of 10 years or more. Finally, she wants the rating of the portfolio to be at most 2 (very good or better). The rating of the portfolio is defined as the weighted average rating of the bonds: LS-1(rate of bond i) (amount invested in bond i) 100,000 The client uses a spreadsheet linear programming model to determine the optimal portfolio. The solved spreadsheet model and sensitivity report are as follows. B D E F G A 1 2 3 4 Bond1 5 Bond2 6 Bond3 7 Bond 4 8 Bond5 9 Bond 6 10 11 12 Years to Return Maturity 0.085 10 0.075 12 0.095 7 0.08 0.1 8 0.09 9 8733.33 56666.67 Amount Rating Invested 1 30000