San Diego State University Operations And Supply Chain Management Assignment Help - Current

Question - 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 $50,000 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 12%, while the Blue Chip fund has a projected annual return of 9%. The investment
advisor requires that at most $35,000 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 a ...Read More lternatives, 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 240.
a. W hat is the recommended investment portfolio for this client? What is the annual return for the
portfolio?
b. Suppose that a second client with $50,000 to invest has been classified as an aggressive investor.
B&R recommends that the maximum portfolio risk rating for an aggressive investor is 320. W hat is the
recommended investment portfolio for this aggressive investor? Discuss what happens to the portfolio
under the aggressive investor strategy.
c. Suppose that a third client with $50,000 to invest has been classified as a conservative investor.
B&R recommends that the maximum portfolio risk rating for a conservative investor is 160. Develop
the recommended investment portfolio for the conservative investor. Discuss the interpretation of the
slack variable for the total investment fund constraint. ...Read Less

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