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# 5 ) An investor wishes to invest some or all of his $ 1 2 . 5 million in a diversified portfolio through a

#5) An investor wishes to invest some or all of his $12.5 million in a diversified portfolio through a commercial lender. The types of investments,
the expected interest per year, and the maximum allowed percentage investment he will consider are shown on the following table. He wants at
least 35% of his investments to be in nonmortgage instruments and no more than 60% to be in high-yield (and high-risk) instruments (i.e.,
expected interest >8%). How should his investment be diversified to make the most interest income?
Investment
Low-income mortgage loans
6.50%
Conventional mortgage loans
6.00%
Government sponsored
mortgage loans
Bond investments
5.75%
15%
Stock investments
8.75%
18%
Futures trading
9.25%
10%
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