The credit unien will have $2,100,000 available for investrment during the coming year. State laws and credit union policies impo • Risk-free securities may not excend 30% of the total funds available tor investment. • Signature loans may net exceed 10% af the funds invested in all laans (autamobile, furniture, ather secured, and Furniture loans plus other secured loens may not exceed the automobile loans. • Other secured loans plus signature loans may not exceed the funds invested in risk-free securities. How should the $2,400,000 be ellocated tw each of Uhe loan/investment alternatives (in dollars) to maximize total annuel returm Automobile loans Furmiture loans ather secured laans Signature loans Risk-free securities

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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employee credit union
investments, together with annual rates of return, are as folows.
on at State
State University is planning the allocation of funds for the coming year. The credit union makes four types of loans to its members. In addition, the credit union invests in risk-free securities to stabilize income. The varlous revenue-producing
The
Type of Loan/Investment
Annual Rate of Return (%)
Automobile loans
Fumiture loans
Other secured loans
10
Signature loans
Risk-free securitles
The credit unien will have $2,400,000 available for investrment during the coming year. State laws and credit union policies impose the fallowing restrictions on the composition of the Ioans and investments.
• Risk-free securities may not excend 30% of the total funds avallable for Investment.
• Signature loans may not exceed 10% of the funds invested in all loans (autamobile, furniture, ather secured, and signature loans).
• Furniture loans plus other secured loeris rmay not exceed the automobile loans.
• Other secured loans plus signature loans may not exceed the funds invested in risk-free securities.
How should the $2.400.000 be ellocated to each of the loan/investment elternatives fin dollars) to maximize total annuel return?
Automobile loans
Furmiture loans
Other secured laans
Signature loans
Risk-free securities
What is the projected total annual returm (in dollars)?
Transcribed Image Text:employee credit union investments, together with annual rates of return, are as folows. on at State State University is planning the allocation of funds for the coming year. The credit union makes four types of loans to its members. In addition, the credit union invests in risk-free securities to stabilize income. The varlous revenue-producing The Type of Loan/Investment Annual Rate of Return (%) Automobile loans Fumiture loans Other secured loans 10 Signature loans Risk-free securitles The credit unien will have $2,400,000 available for investrment during the coming year. State laws and credit union policies impose the fallowing restrictions on the composition of the Ioans and investments. • Risk-free securities may not excend 30% of the total funds avallable for Investment. • Signature loans may not exceed 10% of the funds invested in all loans (autamobile, furniture, ather secured, and signature loans). • Furniture loans plus other secured loeris rmay not exceed the automobile loans. • Other secured loans plus signature loans may not exceed the funds invested in risk-free securities. How should the $2.400.000 be ellocated to each of the loan/investment elternatives fin dollars) to maximize total annuel return? Automobile loans Furmiture loans Other secured laans Signature loans Risk-free securities What is the projected total annual returm (in dollars)?
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