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Here, the inquiry delves into finance. The answer should detail how LP is used to construct optimal investment portfolios by considering risk and return trade-offs, thereby enhancing financial decision-making.

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In financial portfolio optimization, linear programming is used to allocate investment funds among different assets while maximizing expected returns and minimizing risks. The objective function represents the expected portfolio return, subject to constraints on asset allocations, total investment, and risk thresholds. Linear programming models enable investors to find an optimal mix of assets that balances risk and return according to their investment goals and risk tolerance.

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