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Innis Investments manages funds for a number of companies and wealthy dents. The investment strategy is tailored to each client's needs For a new
Innis Investments manages funds for a number of companies and wealthy dents. The investment strategy is tailored to each client's needs For a new dent, Inn has been authorized to invest up to $1.2 milion in two investment funds: a stock fund and a money market fund. Each use of the stock fund costs $50 and provides an annual rate of return of 10% cach unit of the money market fund costs $100 and provides an annual rate of return of 4% The cert wants to minimize risk subject to the requirement that the annual income from the investment be at least $50,000 According to Inns risk measurement system, each unit invested in the stack fund has a risk index of B, and each unit invested in the money market fund has a risk index of 2. The higher risk index associated with the stock fund simply indicates that it is the riskier investment. Innis's client also specified that at least $300,000 be invested in the money market fund Refer to the computer solution shown below. Optinal Objective Value - 4200000000 Red C M 400000000 3000000000 0.00000 0.00000 Constraint Dual Val 6.800D -0.05469 0.00100 1000.000 0.00000 Allable Allowable Cefficient 8.00000 300100 Infinite 4.35000 3.40000 All Constraint 1200000.00000 60000-00000 3000.00100 30000000000 200000000 7000000 12300.00000 Infinita (a) Suppose the risk index for the stock fund (the value of C) increases from its current value of 8 to 10. How does the optimal solution change, at alt O The optimal solution becomes (9600, 3000). O The optimal solution does not change. (0) Suppose the risk index for the money market fund (the value of C) increases from its current value of 3 to 4.5. How does the optimal solution change, if at all? O The optimal solution becomes (0600, 3000). O The optimal solution does not change (c) Suppose C increases to 10 and C increases to 4.5. How does the optimal solution change, at a O The optimal solution becomes (9600, 3000). O The optimal solution does not change.
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