Financial application methodology.

QSO 520Module Three Homework Question

 

For the following question,use financial application methodology.

 

  1. (P3-14) An investor wishes to invest some or all of his $12.5 million in a diversified portfolio through a commercial lender. The types of investments, the expected interest per year, and the maximum allowed percentage investment he will consider are shown on the following table. He wants at least 35% of his investments to be in nonmortgage instruments and no more than 60% to be in high-yield (and high-risk) instruments (i.e., expected interest >8%). How should his investment be diversified to make the most interest income?

 

Investment Expected Interest Maximum Allowed
Low-income mortgage loans 7.00% 20%
Conventional mortgage loans 6.25% 40%
Government-sponsoredmortgage loans 8.25% 25%
Bond investments 5.75% 12%
Stock investments 8.75% 15%
Futures trading 9.50% 10%

 

 

 

Last Updated on February 11, 2019 by EssayPro