Final answer:
The selection of specific investments from among a wide variety of alternatives is the type of LP problem known as portfolio optimization.
Step-by-step explanation:
The selection of specific investments from among a wide variety of alternatives is the type of LP problem known as portfolio optimization. In portfolio optimization, the goal is to allocate investments in such a way that maximizes returns while minimizing risks. This is typically done by diversifying the investments across different asset classes, industries, and regions.
For example, let's say an investor has $100,000 to invest. Instead of putting all the money into a single stock or bond, the investor may choose to spread the investments across multiple stocks and bonds from different companies and sectors. By doing so, the investor reduces the risk of losing all their money if one of the investments performs poorly.
Portfolio optimization is a common problem in finance and is often solved using linear programming techniques to find the optimal allocation of investments that satisfies certain constraints, such as risk tolerance and expected return.