1. NationalInsuranceAssociatedcarriesaninvestmentportfolioofstocks,bonds,and other investment alternatives. Currently $200,000 of funds are available and mustbeconsideredfornewinvestmentopportunities.ThefourstockoptionsNationalisconsideringandtherelevantfinancialdataareasinTable1.

Table1:Problem1.6

	A	B	C	D
Pricepershare	$100	$50	$80	$40
Annual rateof return	0.12	0.08	0.06	0.10
Riskmeasureperdollarinvested	0.10	0.07	0.05	0.08

National's top management has stipulated the following investment guidelines:The annual rate of return for the portfolio must be at least 9% and no one stock canaccountformorethan50%ofthetotaldollarinvestment.

1. Uselinearprogrammingtodevelopaninvestmentportfoliothatminimizes

risk.

1. Ifthefirmignoresriskandusesamaximumreturn-on-investmentstrategy,

whatistheinvestmentportfolio?