You recently inherited a large sum of money. You want to invest some of your money in a mutual fund. The mutual fund has two investment funding options:
An Illinois Bond fund
Twitter Stock fund
The projected returns over the life of the investment are 7.75% for the Illinois bond fund and 12% for the Twitter stock fund.
Whatever portion of the inheritance you finally decide to commit to the mutual fund, you want to invest at least 35% of that amount in the bond fund. In addition, you want to select a mix that will enable you to obtain a total annual return of at least 8.25%.
Using your complete LP model, solve the problem using Microsoft Excel.
What percentage should be allocated to each of the possible investment alternatives?
What is the rate of return that maximizes this portfolios return?