The company recommends that no more than $300,000 be invested in any individual fund and that at
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Question:
The company recommends that no more than $300,000 be invested in any individual fund and that at least $80,000 be invested in each of the mid-cap stock and mortgage fund. The total amount invested in the low-priced and multinational funds are at least 35% of the total investment. The client would like an average return of at least 6%. Assume that X1 - X6 represent the dollar amounts invested in funds 1 through 6, respectively.
A | b | c | d | e | f | |
3 | Data | |||||
4 | Expected | |||||
5 | Fund | Return | Risk Measure | Maximum | Minimum | |
6
| 1 | Low Priced Stock | 0.0723 | 11.87 | 300000 | |
7 | 2 | Multinational | 0.0842 | 12.62 | 300000 | |
8 | 3 | Mid Cap | 0.0666 | 13.72 | 300000 | 80000 |
9 | 4 | Mortgage | 0.0272 | 3.37 | 300000 | 80000 |
10 | 5 | Income Equity | 0.0889 | 8.4 | 300000 | |
11 | 6 | Balanced | 0.035 | 6.91 | 300000 | |
12 | ||||||
13 | Investment = | 750000 | ||||
14 | Target return ≥ | 0.06 | ||||
15 | Low Priced + Multinational | =0.35*C13 |
Given the risk is minimized, what is the return on investment (in dollars)?
Related Book For
Income Tax Fundamentals 2013
ISBN: 9781285586618
31st Edition
Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill
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