Answer:
- How much should be invested in each type of investment in order to maximize the return?
Invest Value Invested
Gov Bonds $40,000
Mutual F $40,000
Market F -
TOTAL $80,000
- What is the maximum return in the first year?
Invest Expected Ret. Portfolio
Gov Bonds 4,0%
Mutual F 7,0%
Market F 0,0%
TOTAL 11,0%
Explanation:
The investor's policy requires that the total amount invested in mutual and money market funds not exceed the amount invested in government bonds.
As Mutual Funds have the higher returns, it means that it's necessary to invest as much as we can in these financial instruments.
If there is no requirement of invest something in the market funds, then to maximize yield, the best option is to invest 50/50 between Government Bonds and Mutual Funds.
This year on the first Saturday of December, falling on December 4 this year
<span>The discount rate is the interest rate charged to commercial banks and other depository institutions on loans they receive from their regional Federal Reserve Bank's lending facility--the discount window. :)</span>
