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J. D. Williams, Inc. is an investment advisory rm that manages more than $120 million in funds for its numerous clients. The company uses an

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J. D. Williams, Inc. is an investment advisory rm that manages more than $120 million in funds for its numerous clients. The company uses an asset allocation model that rec- ommends the portion of each client's portfolio to be invested in a growth stock fund, an income fund, and a money market fund. To maintain diversity in each client's portfolio, the rm places limits on the percentage of each portfolio that may be invested in each of the three funds. General guidelines indicate that the amount invested in the growth fund must be between 20% and 40% of the total portfolio value. Similar percentages for the other two funds stipulate that between 20% and 50% of the total portfolio value must be in the income fund and that at least 30% of the total portfolio value must be in the money market fund. In addition, the company attempts to assess the risk tolerance of each client and adjust the portfolio to meet the needs of the individual investor. For example, Williams just con- tracted with a new client who has $800,000 to invest. Based on an evaluation of the client's risk tolerance, Williams assigned a maximum risk index of 0.05 for the client. The rm's risk indicators show the risk of the growth fund at 0.10, the income fund at 0.07, and the money market fund at 0.01. An overall portfolio risk index is computed as a weighted aven- age of the risk rating for the three funds, Where the weights are the fraction of the client's portfolio invested in each of the funds. Additionally, Williams is currently forecasting annual yields of 18% for the growth fund, 12.5% for the income fund, and 7-5% for the money market fund. Based on the infor mation provided, how should the new client be advised to allocate the $800,000 among the growth, income, and money market funds? Develop a linear programming model that will provide the maximum yield for the portfolio. Use your model to develop a managerial report

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