An investor has $$250,000$ 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 $1\mathrm{.}0.$ 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 $

$($Round to the nearest cent as needed.$)$

Possible Best Solutions

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 $$67,000\mathrm{.}00$ in the stock mutual funds and $$95,500\mathrm{.}00$ in the savings

account.

Model Data