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An investor needs an allocation plan for his retirement funds. He has 600K dollars to invest in bonds. The table below provides the bond options, classification, and annual return rates. Risk is based on default rates and the rate is 1% for A bonds, 5% for B bonds, and 12% for C bonds. The investor wants to maximize expected returns keeping its exposure to a maximum average 7% default rate. Also Corporate bonds must be at least 30% of the portfolio, and the total invested in Municipal bonds must be less than or equal the total invested in Government bonds. Name Type Rating Return Rate B1 Corp A 3.5% B2 Corp B 4.2% B3 Municipal A 2.7% B4 Municipal C 8% B5 Government A 3.9% B6 Government C 6.8% B7 Corp B 5%.

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