Innis Investments manages funds for a number of companies and wealthy clients. The investment strategy is tailored to each client's needs. For a new client, Innis has been authorized to invest up to 1.2 million in two investment funds: a stock fund and a money market fund. Each unit of the stock fund cost $50 and provides an annual rate of return of 10%; each unit of the money market fund cost $100 and provides an annual rate of return of 4%. The client wants to minimize risk subject to the requirement that the annual income from the investment be at least $60,000 according to Innis's risk measurement system, each unit invested in the stock fund has a risk index of 8, and each unit invested in the money market fund has a risk index of 3. the higher the risk index associated with the stock fund simply indicates that the riskier investment. Innis's client also specified that at least $300,000 be invested in the money market fund.

1. Determine how many units of each fund Innis should purchase for the client to minimize the total risk index for the portfolio?

2. How much annual income will this investment strategy generate?

3. What does happen if the client gives you $100 more for investment?

4. What does happen if the client wants $1more return (i.e $60,001)?

5. Though quite unlikely, how many units of each fund Innis should purchase for the client to minimize the total risk index for the portfolio if the risk index of stock fund went down and is only 2 units?

6. How many units of each fund Innis should purchase for the client to minimize the total risk index for the portfolio if the risk index of money market fund went up and now it is 4 units?