Determine which portfolio allocation is closest to the BPT optimal portfolio for the investor below

with the following criteria.

This investor plans to invest $$1,000,000$ and has an aspirational level of $$1,050,000$ with a probability of $75\%.$

She can tolerate some potential loss in wealth but not more than $$100,000($minimum portfolio value of $$900,000).$

Below is two potential portfolio allocations for this scenario. SHOW YOUR WORK

Layer Allocation $1$ Allocation $2$

Riskless $59\%90\%$

Speculative $41\%10\%$

Speculative Portfolio Riskless Portfolio

Probability Expected Return Expected Return

$10\%-25\%0\mathrm{.}50\%$

$60\%12\%$

$30\%50\%$