You Have $450,000 and Are Considering Investing in Three Municipal

question 126

Essay

You have $450,000 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
$__________ in PNF, $__________ in FDMMX, and $__________ in CMBFX.

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Definitions:

Chi-Square Distribution

A probability distribution that is used in statistical significance tests, especially for categorical data.

Degrees of Freedom

The quantity of distinct values or amounts that a statistical distribution can accept.

Population Variance

A measure of the spread of a population’s values, indicating how much the individuals within the population differ from the population mean.

Chi-Squared Distributed

Referring to a statistical distribution that is used to describe the distribution of the sum of squares of a set of variables, often used in hypothesis testing.