Bhavika Investments, a group of financial advisors and retirement planners, is providing advice on how to invest $200,000 for one of its clients in the stock market and in money market funds. Each dollar invested in the stock market gives a return of 10% and each dollar invested in money market funds gives a return of 5%. However, there is risk involved: the risk measure for each dollar invested in the stock market is 12, and the risk measure for each dollar invested in the money market is 5. The table below summarizes the information just presented. Risk measure per investment dollar Percentage return per investment dollar Stock Market 12 10% Money market 5 5% The client has stipulated an annual return of at least $14,000 on his investments in the stock market and money market. Formulate a linear programming model for this situation that will minimize the risk of investing and solve it to find out how much should be invested in each market.
Bhavika Investments, a group of financial advisors and retirement planners, is providing advice on how to invest $200,000 for one of its clients in the stock market and in money market funds. Each dollar invested in the stock market gives a return of 10% and each dollar invested in money market funds gives a return of 5%. However, there is risk involved: the risk measure for each dollar invested in the stock market is 12, and the risk measure for each dollar invested in the money market is 5. The table below summarizes the information just presented.
| Risk measure per investment dollar | Percentage return per investment dollar | |
| Stock Market | 12 | 10% |
| Money market | 5 | 5% |
The client has stipulated an annual return of at least $14,000 on his investments in the stock market and money market. Formulate a linear programming model for this situation that will minimize the risk of investing and solve it to find out how much should be invested in each market.
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