An investor has up to $250,000 to invest in three types of investments. Type A pays 8% annually and has a risk factor of

Question

0. Type B pays 10% annually and has a risk factor of 0.06.
Type C pays 14% annually and has a risk factor of 0.10. To
have a well-balanced portfolio, the investor imposes the following conditions. The average risk factor should be no
greater than 0.05. Moreover, at least one-fourth of the total
portfolio is to be allocated to Type A investments and at least
one-fourth of the portfolio is to be allocated to Type B investments. How much should be allocated to each type of investment to obtain a maximum return?

Answer 1

if the risk factors are as stated, I assume the average is weighted by the amount invested? If so, then you want to minimize
p = (0A + 0.06B + 0.10C)/3
If the weight also includes the interest rate, then include that as a factor in each term.
Now specify the other constraints, and solve as usual.

Answer 2

ansewer