Problem 3-11 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 costs $50 and provides an annual rate of return of 10%; each unit of the money market fund costs $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 risk index associated with the stock fund simply indicates that it is the riskier investment. Innis's client also specifies that at least $300,000 be invested in the money market fund. Letting S units purchased in the stock fund M units purchased in the money market fund leads to the following formulation: Min 8S 3M S.t 50s 100M 1,200,000 Funds available 5S 4M 60,000 Annual income M 3,000 Units in money market S, M 0 Problem 3-11 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 costs $50 and provides an annual rate of return of 10%; each unit of the money market fund costs $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 risk index associated with the stock fund simply indicates that it is the riskier investment. Innis's client also specifies that at least $300,000 be invested in the money market fund. Letting S units purchased in the stock fund M units purchased in the money market fund leads to the following formulation: Min 8S 3M S.t 50s 100M 1,200,000 Funds available 5S 4M 60,000 Annual income M 3,000 Units in money market S, M 0