ASSET ALLOCATION Ashley has earmarked at most $ 250 , 000 for investment in three mutual funds: a money market fund, an international equity fund, and a growth-and-income fund. The money market fund has a rate of return of 6 % /year , the international equity fund has a rate of return of 10 % /year , and the growth-and-income fund has a rate of return of 15 % /year . Ashley has stipulated that no more than 25 % of her total portfolio should be in the growth-and-income fund and that no more than 50 % of her total portfolio should be in the international equity fund. To maximize the return on her investment, how much should Ashley invest in each type of fund? What is the maximum return?
ASSET ALLOCATION Ashley has earmarked at most $ 250 , 000 for investment in three mutual funds: a money market fund, an international equity fund, and a growth-and-income fund. The money market fund has a rate of return of 6 % /year , the international equity fund has a rate of return of 10 % /year , and the growth-and-income fund has a rate of return of 15 % /year . Ashley has stipulated that no more than 25 % of her total portfolio should be in the growth-and-income fund and that no more than 50 % of her total portfolio should be in the international equity fund. To maximize the return on her investment, how much should Ashley invest in each type of fund? What is the maximum return?
Solution Summary: The author calculates the total investment in three different funds to maximize the rate of return and the amount of maximum return. Ashley stipulates that no more than 25% of her total portfolio should be in the growth-and-income
ASSET ALLOCATION Ashley has earmarked at most
$
250
,
000
for investment in three mutual funds: a money market fund, an international equity fund, and a growth-and-income fund. The money market fund has a rate of return of
6
%
/year
, the international equity fund has a rate of return of
10
%
/year
, and the growth-and-income fund has a rate of return of
15
%
/year
. Ashley has stipulated that no more than
25
%
of her total portfolio should be in the growth-and-income fund and that no more than
50
%
of her total portfolio should be in the international equity fund. To maximize the return on her investment, how much should Ashley invest in each type of fund? What is the maximum return?
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