Investor Matt has $727,000 to invest in bonds. Bond A yields an average of 8.6% and the bond B yields 8%. Matt requires that at least 4 times as much money be invested in bond A as in bond B. You must invest in these bonds to maximize his return. What is the maximum return? per year. Round to the nearest cent.
Investor Matt has $727,000 to invest in bonds. Bond A yields an average of 8.6% and the bond B yields 8%. Matt requires that at least 4 times as much money be invested in bond A as in bond B. You must invest in these bonds to maximize his return. What is the maximum return? per year. Round to the nearest cent.
Chapter14: Investing In Stocks And Bonds
Section: Chapter Questions
Problem 1FPC
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![Investment
Investors must make decisions about how much money to invest in various products. Their
tolerance for risk as well as the return rates and minimum investment requirements comes into play
in this decision making process. Oftentimes, the situation can be described as a linear
programming problem, where the objective function is the return on investment. Answer the
questions below to help the investor.
Investor Matt has $727,000 to invest in bonds. Bond A yields an average of 8.6% and the bond B
yields 8%. Matt requires that at least 4 times as much money be invested in bond A as in bond B.
You must invest in these bonds to maximize his return. What is the maximum return?
per year. Round to the nearest cent.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fa86f14d3-956e-404f-9d7d-928ddcb2c9e2%2Fd339ff93-0551-4e6b-b8e3-c1b3f428f42e%2Fa762ghir_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Investment
Investors must make decisions about how much money to invest in various products. Their
tolerance for risk as well as the return rates and minimum investment requirements comes into play
in this decision making process. Oftentimes, the situation can be described as a linear
programming problem, where the objective function is the return on investment. Answer the
questions below to help the investor.
Investor Matt has $727,000 to invest in bonds. Bond A yields an average of 8.6% and the bond B
yields 8%. Matt requires that at least 4 times as much money be invested in bond A as in bond B.
You must invest in these bonds to maximize his return. What is the maximum return?
per year. Round to the nearest cent.
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