Question

An investment broker wants to invest up to $20,000. She can invest in two mutual funds based on their yearly average return for the 5 years ending December 31, 2009: the Franklin Natural Resources fund yielding 10% and the Oppenheimer Developing Markets A fund yielding 15%. She wants to invest at least $5000 in the Franklin Natural Resources fund and no more than $8000 in the Oppenheimer Developing Markets A fund. How much should she invest in each type of fund to maximize her return?

Answer 1

Answer:

8,000 Oppenheimer and 12,000 Natural resources

Explanation:

as is said, the fund Oppenheimer is the one who has given the highest return (15%), so the key here is trying to find the highest participation in this fund, but as said too there is a constrarin, and it is the maximun amount invested in oppenheimer (8,000).

So as Oppenheimer is the fund with highest return, we must invest all posible, so the investment will be 8,000. As the total amount is 20,000 using difference is possible to know that the investment in natural resources will have a total amount of 12,000, it respect the other option.