Your uncle has just given you cash of $20,000 to invest. You decide to invest in a combination of a riskless asset, a stock fund, and a long-term bond fund, with the following properties:

E(r) Riskless Asset 0.01 (1%) 0.00 Stock fund 0.12 0.19 Long-term bond fund 0.055 0.10 The correlation of returns between the long-term bond fund and the stock fund is 0.3. The market portfolio is defined as 0.40 of the stock index S and 0.60 of the long-term bond fund.

What dollar amount should you invest in the long-term bond fund, if you would like to achieve an expected return of 12% with the lowest possible standard deviation?

Group of answer choices

17,201.65

18,591.55

30,985.92

10,956.00

1,408.45