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An investor wishes to invest some of all his 12.5 million in a diversified portfolio through a commercial lender. The types of investments, the expected

An investor wishes to invest some of all 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 the following table. He wants at least 35% of his investment to be 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?

INVESTMENTEXPECTED INTERESTMaximun ALLOWED
Low-income mortgage7.00%20%
Conventional mortgage Loans6.25%40%
Government sponsored mortgage loans8.25%25%
Bond Investments5.75%12%
Stock investments8.75%15%
Futures trading9.50%

10%

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