Linear Programming:

15. Korea National Bank is preparing to invest up to 5 billion won of its cash reserves. The bank is considering the following alternatives: Expected Rate Alternative of Return (%) Risk Factor Treasury securities 7.6 O Corporate bonds 8.9 Loans to corporations 10.3 Stocks 14.0 Ln The expected return is measured in percent over one year. The risk factor is a projection for next year, based on experience. The bank's investment policy requires that: a. The amount loaned to corporations will not exceed the amount invested in Treasury securities. b. The weighted risk factor will not exceed 1.9. c. For every won invested in stocks, there will be at least 0.5 won invested in Treasury securities. d. The amount invested in stocks will not exceed 25% of the total amount invested. Find the investment portfolio that will maximize the bank's return on investment. (Hint: To find the weighted risk factor, multiply the amounts invested in the corre- sponding risk factor and divide by the total investment.)