Weighted average of the risk rating of the two investment

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Reference no: EM131358539

A person invest all 50000 in two stocks: stock A has an expected annual return of 1 % and a risk rating of 2 and stock B has an expected annual return of 6% and a risk rating of 7. The risk rating of total investment is the weighted average of the risk rating of the two investment. the person want to maximize the total expected annual return. however, to reduce risk, he require that

1. investment in B be no more than 50% of the total expected annual return and

2. the average risk rating of the total investment be no more than 5

a. formulate the person investment plan as a linear programing problem

b. show graphically the feasible region of investment

Reference no: EM131358539

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