An investor wishes to maximize the return on her portfolio while also maintaining certain liquidity and risk standards. The alternatives and their corresponding returns are:
$\begin{array} { l r } \text { Alternative } & \text { Return } \\\text { Municipal Bonds (M) } & 6.2 \% \\\text { Certificates of Deposit (S) } & 5.1 \% \\\text { Treasury Bills (T) } & 6.9 \% \\\text { AA Bonds (B) } & 10.5 \%\end{array}$
The investor wishes to have at least 25% of the portfolio in Treasury Bills, no more than 20% in AA bonds; no more than 15% in Certificates of Deposit, and no more than 10% in municipal bonds. Formulate a linear programming problem for the investor seeking to maximize the expected return of a $200,000 portfolio.

Question

An investor wishes to maximize the return on her portfolio while also maintaining certain liquidity and risk standards. The alternatives and their corresponding returns are:

\begin{array} { l r } \text { Alternative } & \text { Return } \\\text { Municipal Bonds (M) } & 6.2 \% \\\text { Certificates of Deposit (S) } & 5.1 \% \\\text { Treasury Bills (T) } & 6.9 \% \\\text { AA Bonds (B) } & 10.5 \%\end{array}

The investor wishes to have at least 25% of the portfolio in Treasury Bills, no more than 20% in AA bonds; no more than 15% in Certificates of Deposit, and no more than 10% in municipal bonds. Formulate a linear programming problem for the investor seeking to maximize the expected return of a $200,000 portfolio.

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The Answer of An investor wishes to maximize the return on her portfolio while also maintaining certain liquidity and risk standards. The alternatives and their corresponding returns are: $\begin{array} { l r } \text { Alternative } & \text { Return } \ \text { Municipal Bonds (M) } & 6.2 \% \ \text { Certificates of Deposit (S) } & 5.1 \% \ \text { Treasury Bills (T) } & 6.9 \% \ \text { AA Bonds (B) } & 10.5 \% \end{array}$ The investor wishes to have at least 25% of the portfolio in Treasury Bills, no more than 20% in AA bonds; no more than 15% in Certificates of Deposit, and no more than 10% in municipal bonds. Formulate a linear programming problem for the investor seeking to maximize the expected return of a $200,000 portfolio.

An Investor Wishes to Maximize the Return on Her Portfolio