Construct an influence diagram for the portfolio allocation model in Example 11.15 Data from Example 11.15 An
Question:
Construct an influence diagram for the portfolio allocation model in Example 11.15
Data from Example 11.15
An investor has $100,000 to invest in four assets. The expected annual returns and minimum and maximum amounts with which the investor will be comfortable allocating to each investment are as follows:
Let us assume that the risk factors per dollar allocated to each asset have been determined as follows:
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Investment 1. Life insurance 2. Bond mutual funds 3. Stock mutual funds 4. Savings account Annual Return 5% 7% 11% 4% Minimum $2,500 $30,000 $15,000 None Maximum $5,000 None None None
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