Blair & Rosen, Inc. (B&R), is a brokerage firm that specializes in investment portfolios designed to meet the specific risk tolerances of its clients. A client who contacted B&R this past week has a maximum of $70,000 to invest. B&R's investment advisor decides to recommend a portfolio consisting of two investment funds: an Internet fund and a Blue Chip fund. The Internet fund has a projected annual return of 8%, whereas the Blue Chip fund has a projected annual return of 7%. The investment advisor requires that at most $45,000 of the client's funds should be invested in the Internet fund. B&R services include a risk rating for each investment alternative. The Internet fund, which is the more risky of the two investment alternatives, has a risk rating of 6 per thousand dollars invested. The Blue Chip fund has a risk rating of 4 per thousand dollars invested. For example, if $10,000 is invested in each of the two investment funds, B&R's risk rating for the portfolio would be 6(10)+4(10) 100. Finally, B&R developed a questionnaire to measure each client's risk tolerance. Based on the responses, each client is classified as a conservative, moderate, or aggressive investor. Suppose that the questionnaire results classified the current client as a moderate investor. B&R recommends that a client who is a moderate investor limit his or her portfolio to a maximum risk rating of 340. (a) Formulate a linear programming model to find the best investment strategy for this client. (Assume N is the amount invested in the internet fund project and B is the amount invested in the Blue Chip fund. Express the amounts invested in thousands of dollars.) Max s.t. Available investment funds Maximum investment in the internet fund Maximum risk for a moderate investor N, B≥0 (b) Build a spreadsheet model and solve the problem using Excel Solver. What is the recommended investment portfolio (in dollars) for this client? internet fund blue chip fund What is the annual return (in dollars) for the portfolio? (b) Suppose that a second client with $70,000 to invest has been classified as an aggressive investor. B&R recommends that the maximum portfolio risk rating for an aggressive investor is 370. What is the recommended investment portfolio (in dollars) for this aggressive investor? internet fund blue chip fund $ $ (d) Suppose that a third client with $70,000 to invest has been classified as a conservative investor. B&R recommends that the maximum portfolio risk rating for a conservative investor is 220. Develop the recommended investment portfolio (in dollars) for the conservative investor. internet fund blue chip fund

Two dentists, Lydia Russell and Jerry Carlton, are planning to establish practices in a newly developed community. Both have allocated approximately the same total budget for advertising in the local newspaper and for the distribution of fliers announcing their practices. Because of the location of their offices, Russell is expected to get 43% of the business if both dentist advertise only in the local newspaper; if both dentist advertise through fliers, then Russell is expected to get 39% of the business; if Russell advertises exclusively in the local newspaper and Carlton advertises exclusively through fliers, then Russell is expected to get 66% of the business. Finally, if Russell advertises through fliers exclusively and Carlton advertises exclusively in the local newspaper, then Russell is expected to get 58% of the business. (a) Construct the payoff matrix for the game. (Enter each percentage as a decimal.) Carlton Russell N P = F Q= Is the game strictly determined? Yes No N (b)…

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Two dentists, Lydia Russell and Jerry Carlton, are planning to establish practices in a newly developed community. Both have allocated approximately the same total budget for advertising in the local newspaper and for the distribution of fliers announcing their practices. Because of the location of their offices, Russell is expected to get 47% of the business if both dentist advertise only in the local newspaper; if both dentist advertise through fliers, then Russell is expected to get 42% of the business; if Russell advertises exclusively in the local newspaper and Carlton advertises exclusively through fliers, then Russell is expected to get 50% of the business. Finally, if Russell advertises through fliers exclusively and Carlton advertises exclusively in the local newspaper, then Russell is expected to get 49% of the business. (a) Construct the payoff matrix for the game. (Enter each percentage as a decimal.)     Carlton              N                 F Russell    NF…

3. A hedge fund has two trading desks (A and B ) which have different traders with different trading strategies. The hedge fund has up to $10 million in total which it can allocate to the two desks for them to start investing. However, it can only allocate at most $7 million to each desk to follow the diversification information given to investors. After 1 year, it is expected that desk A will make a 5% return (i.e. for every $1 in initial funding it will end with $1.05 for a profit of $0.05) and desk B will make a 10% return. However, for every $1 million in initial funding, desk A requires 3 support staff (for trade execution, risk management, IT, etc) and desk B requires 5 support staff. There are only 40 support staff available. (a) Formulate an LP problem to determine how the fund should best allocate its initial funding to maximise the profit in the first year. (b) Solve the hedge fund's problem using the simplex method. (c) By considering the optimum of the dual problem,…

A business lady is wondering whether to invest OMR10,000 in buying bonds at Muscat Security Market (MSM) or put it in a fixed deposit account in Sohar bank at an interest rate of 9%. For the MSM, if the market is good, she believes that she could get a 14% return on her money. With a fair market, she expects to get an 8% return. If the market is bad, she will most likely get no return, i.e., the return would be 0%. She estimates that the probability of a good market is 0.4, the probability of a fair market is 0.4, and the probability of a bad market is 0.2, and she wishes to maximize her long-run average return. a. Develop a decision/payoff table for this problem. b. What is the best decision? c. Calculate the expected value of perfect information and interpret the result. d. The business lady is thinking about paying for a financial advising company that could predict very accurately whether the market would be good, fair, or bad. Advise the business lady on the maximum amount of…

Consider the following table containing yields for mutual funds in different asset classes (small, mid, and large cap).  Fund Yield by Asset Class Small Cap Mid Cap Large Cap Fund Yield (%) Fund Yield (%) Fund Yield (%) Explorer Value 1.22 Capital Value 0.96 Equity Income 3.24 Small-Cap Value Index Admiral 2.46 Mid-Cap Value Index Admiral 0.47 High Dividend Yield Index 3.50 Small-Cap Index Admiral Shares 1.49 Extended Market Index Admiral Shares 1.22 500 Index Admiral Shares 0.47 Strategic Small-Cap Equity 1.02 Mid-Cap Index Admiral Shares 1.52 Diversified Equity 1.23 Explorer 0.17 Mid-Cap Growth 1.58 FTSE Social Index 1.42 Small-Cap Growth Index Admiral 0.21 Capital Value 0.32 Growth Equity 1.29 Explorer Value 2.42 Strategic Equity 1.54 U.S. Growth 0.37 Small-Cap ETF 1.44 Capital Opportunity Admiral Shares 2.69 Windsor 1.64 sum of squares for treatmentssum of squares for error≈1.0016≈17.2504sum of squares for treatments≈1.0016sum of squares for error≈17.2504…

In 2011, the united states government was facing a $1.5 trillion federal budget deficit. Numerous cuts were proposed, including cutting federal funding of the Corporation for Public broadcasting (CPB). The western reserve public media website argued against the cuts, saying:  public television is America's largest classroom, ...all at the cost of about $1.35 per person per year.... Eliminating the...investment in CPB would only reduce the $1.5trillion federal budget deficit by less than 3 ten-thousandths of one percent, but it would have a devastating impact on local communities nationwide.  Use the information in the first paragraph to estimate annual federal spending on public broadcasting.

You have $600,000 and are considering investing in three municipal bond funds, Pimco, Fidelity Spartan, and Columbia Oregon. You have the following data: Cоmpany Yield PNF (Pimco NY) 7% FDMMX (Fidelity Spartan Mass) 5% CMBFX (Columbia Oregon) 4% Your broker has made the following suggestions: At least 50 percent of your total investment should be in CMBFX. No more than 10 percent of your total investment should be in PNF. How much should you invest in each fund to maximize your anticipated returns while following your broker's advice? a. $60,000 in PNF, $300,000 in FDMMX, and $240,000 in CMBFX O b. $60,000 in PNF, $240,000 in FDMMX, and $300,000 in CMBFX c. $300,000 in PNF, $60,000 in FDMMX, and $240,000 in CMBFX d. $300,000 in PNF, $240,000 in FDMMX, and $60,000 in CMBFX e. $240,000 in PNF, $300,000 in FDMMX, and $60,000 in CMBFX

Question 1 Consider an investor's choice of a farm unit in the Corn Belt, one in the Califormia Central Valley, or the one in the Great Plains region. An investor added these three assets in one portfolio. The portfolio composed of equal proportions of the three investments. Use the information in the table below to answer the questions that follows (show all your work for partial credits). Investment Alternatives Corn Belt (1) Central Valley (2) Great Plains (3) Exp. Return n-0.14 0.12 n-0.07 Std. Dev. O-0.08 o-0.05 oy-0.01 Weight in Portfolio w-1/3 wz-1/3 wy-1/3 Correlation Among Investment 1 and 2 (p2)-0.30 1 and 3 (pu) --0.40 2 and 3 (s) --0.10 Portfolio Data for Financial Servicing Analysis Under Risk a. Calculate the expected retum of the portfolio. b. Calculate the variance and the standard deviation of the portfolio. c. Calculate the variance and standard deviation of the portfolio assuming that the correlation among the investments is all equal to 0. d. Calculate the variance…