You have $600,000 and are considering investing in three municipal bond funds, Pimco, Fidelity Spartan, and Columbia Oregon. You have the following data: $$\begin{array} { | c | c | }
\hline \text { Company } & \text { Yield } \
\hline \text { PNF (Pimco NY) } & 7 \% \
\hline \text { FDMMX (Fidelity Spartan Mass) } & 5 \% \
\hline \text { CMBFX (Columbia Oregon) } & 4 \% \
\hline
\end{array}$$ Your broker has made the following suggestions:
At least 50 percent of your total investment should be in CMBFX.
No more than 10 percent of your total investment should be in PNF.
How much should you invest in each fund to maximize your anticipated returns while following your broker's advice

A)$60,000 in PNF, $240,000 in FDMMX, and $300,000 in CMBFX
B) $240,000 in PNF, $300,000 in FDMMX, and $60,000 in CMBFX
C) $300,000 in PNF, $240,000 in FDMMX, and $60,000 in CMBFX
D) $300,000 in PNF, $60,000 in FDMMX, and $240,000 in CMBFX
E) $60,000 in PNF, $300,000 in FDMMX, and $240,000 in CMBFX

Question

You have $600,000 and are considering investing in three municipal bond funds, Pimco, Fidelity Spartan, and Columbia Oregon. You have the following data: $$\begin{array} { | c | c | } 
\hline \text { Company } & \text { Yield } \
\hline \text { PNF (Pimco NY) } & 7 \% \
\hline \text { FDMMX (Fidelity Spartan Mass) } & 5 \% \
\hline \text { CMBFX (Columbia Oregon) } & 4 \% \
\hline
\end{array}$$   Your broker has made the following suggestions:
At least 50 percent of your total investment should be in CMBFX.
No more than 10 percent of your total investment should be in PNF.
How much should you invest in each fund to maximize your anticipated returns while following your broker's advice 
  
A)$60,000 in PNF, $240,000 in FDMMX, and $300,000 in CMBFX
B) $240,000 in PNF, $300,000 in FDMMX, and $60,000 in CMBFX
C) $300,000 in PNF, $240,000 in FDMMX, and $60,000 in CMBFX
D) $300,000 in PNF, $60,000 in FDMMX, and $240,000 in CMBFX
E) $60,000 in PNF, $300,000 in FDMMX, and $240,000 in CMBFX

Quizplus · Accepted Answer

To maximize returns while adhering to the broker's advice, you should invest the minimum required in the lowest yield (CMBFX at 4%) and the maximum allowed in the highest yield (PNF at 7%). Therefore, investing $300,000 in CMBFX (50% of total, as required), $60,000 in PNF (10% of total, as allowed), and the remaining $240,000 in FDMMX optimizes the returns within the given constraints.

You Have $600,000 and Are Considering Investing in Three Municipal