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A financial investor considers a set of stocks and bonds with different risks and rates of return. She wishes to select a mixture of three
A financial investor considers a set of stocks and bonds with different risks and rates of return. She wishes to select a mixture of three stocks and three bonds that will maximize her expected rate of return subject to certain minimum risk standards. The investor allocates $30,000 toward this fund. After careful analysis, she decides that 1. At least 50% of the fund should be in stocks. 2. No more than 20% should be in junk bonds. 3. At least 10% should be in Treasury bonds. 4. At least 15% of the fund should be in municipal bonds. The estimated returns of the six securities are: Find the optimal allocation of $30,000. (The sum of A, B, C, D, E and F should be 30,000 .)
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