An investor has $150,000 to invest in four assets. The expected annual returns, minimum and maximum amounts with which the investor will be comfortable allocating to each investment, and risk factors are shown in the accompanying table. Assume that the investor will tolerate a weighted risk per dollar invested of at most 1.0. Experiment with the accompanying portfolio allocation model by testing each of the possible best solutions, included, to attempt to find the best solution that maximizes the expected annual return and meets the total weighted risk constraint. Click here to view the portfolio allocation model. Click here to view the returns, minimums, maximums, and risk factors. Click here to view some possible best solutions. The best solution is to invest $ in life insurance, $ in bond mutual funds, $ in stock mutual funds, and in savings accounts, for a total expected return of S (Round to the nearest cent as needed.) D E F G H 1 J K L M N o a Q R S T U v Minimum $2,500.00 $30,000.00 $15,000.00 none B 1 Portfolio Allocation Model 2 3 Data 4 Annual 5 Investment return 6 Life Insurance 5.0% 7 Bond mutual funds 7.0% 8 Stock mutual funds 11.0% 9 Savings Account 4.0% 10 Total amount available $100,000 11 12 Model 13 14 Amount invested Life Insurance $5,000.00 Bond mutual funds $50,000.00 Stock mutual funds $15,000.00 Savings Account $30,000.00 Maximum $5,000.00 none none none Limit Risk factor per dollar -0.5 1.8 2.1 -0.3 100,000 21 Total amount invested $100,000.00 Total weighted risk 110,000.00 24 Total expected return $6,600.00 = a g Ne a 86 gge Model + Investment Life Insurance Bond mutual funds Stock mutual funds Savings Account Annual Return 5.5% 7.0% 12.0% 3.5% Minimum $3,750.00 $45,000.00 $22,500.00 None Risk Factor per Maximum Dollar Invested $7,500.00 -0.4 None 1.8 None 2.2 None -0.2 Some possible best solutions to try are listed below. Invest the minimum amount in life insurance, bond mutual funds, and stock mutual funds, and invest everything else in the savings account. Invest the maximum possible in life insurance, the minimum possible in bond and stock mutual funds, and invest everything else in the savings account. Invest the maximum in life insurance and the minimum in bond mutual funds. Determine the amount to invest in stock mutual funds based on the remaining money and the appropriate risk factors. Invest everything else in the savings account Invest the maximum in life insurance and the minimum in bond mutual funds. Invest $40,000.00 in the stock mutual funds and $57,500.00 in the savings account . An investor has $150,000 to invest in four assets. The expected annual returns, minimum and maximum amounts with which the investor will be comfortable allocating to each investment, and risk factors are shown in the accompanying table. Assume that the investor will tolerate a weighted risk per dollar invested of at most 1.0. Experiment with the accompanying portfolio allocation model by testing each of the possible best solutions, included, to attempt to find the best solution that maximizes the expected annual return and meets the total weighted risk constraint. Click here to view the portfolio allocation model. Click here to view the returns, minimums, maximums, and risk factors. Click here to view some possible best solutions. The best solution is to invest $ in life insurance, $ in bond mutual funds, $ in stock mutual funds, and in savings accounts, for a total expected return of S (Round to the nearest cent as needed.) D E F G H 1 J K L M N o a Q R S T U v Minimum $2,500.00 $30,000.00 $15,000.00 none B 1 Portfolio Allocation Model 2 3 Data 4 Annual 5 Investment return 6 Life Insurance 5.0% 7 Bond mutual funds 7.0% 8 Stock mutual funds 11.0% 9 Savings Account 4.0% 10 Total amount available $100,000 11 12 Model 13 14 Amount invested Life Insurance $5,000.00 Bond mutual funds $50,000.00 Stock mutual funds $15,000.00 Savings Account $30,000.00 Maximum $5,000.00 none none none Limit Risk factor per dollar -0.5 1.8 2.1 -0.3 100,000 21 Total amount invested $100,000.00 Total weighted risk 110,000.00 24 Total expected return $6,600.00 = a g Ne a 86 gge Model + Investment Life Insurance Bond mutual funds Stock mutual funds Savings Account Annual Return 5.5% 7.0% 12.0% 3.5% Minimum $3,750.00 $45,000.00 $22,500.00 None Risk Factor per Maximum Dollar Invested $7,500.00 -0.4 None 1.8 None 2.2 None -0.2 Some possible best solutions to try are listed below. Invest the minimum amount in life insurance, bond mutual funds, and stock mutual funds, and invest everything else in the savings account. Invest the maximum possible in life insurance, the minimum possible in bond and stock mutual funds, and invest everything else in the savings account. Invest the maximum in life insurance and the minimum in bond mutual funds. Determine the amount to invest in stock mutual funds based on the remaining money and the appropriate risk factors. Invest everything else in the savings account Invest the maximum in life insurance and the minimum in bond mutual funds. Invest $40,000.00 in the stock mutual funds and $57,500.00 in the savings account
