Many companies and organizations offer $401$K plans that allow for individual allocation choice within a set of assets. One example is

the American Dental Association; this information is from the information they provided to their members in July $2022.$ 

Suppose you are helping someone make their investment decisions between these funds and the following information. To ensure diversification, the minimum investment of each fund should be $2\mathrm{.}5\%,$ but no more than $70\%$ can be invested in any given fund. Assume, initially, that any risk level $($beta$)$ is acceptable. What investment strategy yields the optimal return? The optimal annual return is $15\mathrm{.}18.$

After optimizing the model, use SolverTable to show the effect on total annual return and the decision variables when the desired risk level ranges from $\mathrm{.}86$ to $1\mathrm{.}36$ in increments of $\mathrm{.}05.$  Calculate the change in annual return from the ST output.

Answer rating: 100% (QA)

Solution A 401 K plan is a type of retirement savings account that allows employees to contribute a portion of their pretax income to a portfolio of investment options such as mutual funds ETFs stocks ... View the full answer