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Question 2 The Sketchy Loner is a bank that issues 6 types of loans. In addition, to diversify its portfolio and minimize its risk, the

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Question 2 The Sketchy Loner is a bank that issues 6 types of loans. In addition, to diversify its portfolio and minimize its risk, the bank invests in risk-free securities. The 6 loan types and the risk-free securities with their annual rates of return are given below: Type of Loan or Security Annual Rate of Return [0/6] Home Mortgage (rst) 12% Home Mortgage [second] 13% Commercial Loan 16% Auto Loan 16% Home Improvement Loan 19% Risk Free Security 11.5% The bank's objective is to maximize the annual rate of return on investments subject to the following policies, restrictions, and regulations: 1. The bank has $780 million in available funds. 2 Risk-free securities must contain at least 10% of the total funds available for investments. 3. Home improvement loans cannot exceed $90,000,000. 4 The investment in rst and second mortgage loans must be at least 60 percent of all the funds invested in the 5 loan types. 5. The investment in the rst mortgage loans must be at least three times the funds invested in second mortgage loans. 6 Home improvement loans cannot exceed 15 percent of the funds invested in rst mortgage loans. 7. Automotive loans and home improvement loans together may not exceed the commercial loans. 8 Commercial loans cannot exceed 60% of the total funds invested in mortgage loans. 3] Formulate the problem into proper Linear programming formatf6 marks) b] Use Excel's Solver to determine the optimal solution[3 marks} c] State the optimal solution in the context of the business problem, that is to say, how exactly should the money be allocated to the possible investments?(1 mark)

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