A small business owner has decided to invest 50000 per year

Reference no: EM13598192

A small business owner has decided to invest $50,000 per year in the stock market for her retirement. She is consider the two stocks listed below with the expected returns adn risk index. the risk indes is on a scale of 1 to 10 with 10 being the most risky.
Stock                                   Expected Retun    Risk Index
Risky business inc.                           12%                   9
Safety first co.                                    6%                   4

a. Formulate this into a LP problem with an objective function and constraint. Define your variables.
b. Draw a graph of the feasible area. Identify all corner points.
c. Solve the LP problem graphically. List the optimal solution in terms of dollars invested in each stock.
d. What is the average risk of the portfolio?
e. What is the expected return of the portfolio?

Reference no: EM13598192

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