Define higher risk index associated with the stock fund

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Reference no: EM131768815

Question: Innis consulting group Investments manages funds for a number of companies and wealthy clients. The investment strategy is tailored to each client's needs. For a new client, Innis has been authorized to invest up to $1.2 million in two investment funds: a stock fund and a money market fund. Each unit of the stock fund costs $50 and provides an annual rate of return of $5 per dollar invested ; each unit of the money market fund costs $100 and provides an annual rate of return of $4 for each dollar invested . The client wants to minimize risk subject to the requirement that the annual income from the investment be at least $60,000. According to Innis's risk measurement system, each unit invested in the stock fund has a risk index of 8, and each unit invested in themoney market fund has a risk index of 3; the higher risk index associated with the stock fund simply indicates that it is the riskier investment. Innis's client also specified that at least $300,000 be invested in the money market fund.

Reference no: EM131768815

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