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PROBLEM 1.Investment manager Max Gaines has several clients who wish to

Question : PROBLEM 1.Investment manager Max Gaines has several clients who wish to : 1825495

PROBLEM

1.Investment manager Max Gaines has several clients who wish to own a mutual fund portfolio that matches, as a whole, the performance of the S&P 500 stock index. His task is to determine what proportion of the portfolio should be invested in each of the five mutual funds listed below so that the portfolio most closely mimics the performance of the S&P 500 index. Formulate the appropriate nonlinear program.

 

Annual Returns (Planning Scenarios)

Mutual Fund

Year 1

Year 2

Year 3

Year 4

International Stock

26.73

22.37

  6.46

?3.19

Large-Cap Blend

18.61

14.88

10.52

  5.25

Mid-Cap Blend

18.04

19.45

15.91

?1.94

Small-Cap Blend

11.33

13.79

?2.07

  6.85

Intermediate Bond

  8.05

  7.29

  9.18

  3.92

S&P 500 Index

21.00

19.00

12.00

  4.00

2.Financial planner Minnie Margin has a substantial number of clients who wish to own a mutual fund portfolio that matches, as a whole, the performance of the Russell 2000 index. Her task is to determine what proportion of the portfolio should be invested in each of the five mutual funds listed below so that the portfolio most closely mimics the performance of the Russell 2000 index. Formulate the appropriate nonlinear program.

 

Annual Returns (Planning Scenarios)

Mutual Fund

Year 1

Year 2

Year 3

Year 4

International Stock

22.37

26.73

  4.86

  2.17

Large-Cap Value

15.48

19.64

11.50

?5.25

Mid-Cap Value

17.42

20.07

?4.97

?1.69

Small-Cap Growth

23.18

12.36

  3.25

  3.81

Short-Term Bond

  9.26

  8.81

  6.15

  4.04

Russell 2000 Index

20.00

22.00

  8.00

?2.00

Solution
5 (1 Ratings )

Solved
Marketing 1 Year Ago 9 Views
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