The Rio Credit Union has $250,000 available to invest in a 12-month commitment and wants to invest all of it. The money can be placed in Brazilian treasury notes yielding an 12% return or in riskier high-yield bonds at an average rate of return of 9%. Credit union regulations require diversification to the extent that at least 40% of the investment be placed in Treasury notes. It is also decided that no more than 30% of the investment be placed in bonds. The aim of the objective function for Rio Credit Union should be to Maximize the objective value. The optimal ROI occurs when: $ invested in Treasury notes = (enter your response as a whole number).

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
Problem 1PS
icon
Related questions
Question
The Rio Credit Union has $250,000 available to invest in a 12-month commitment and wants to invest all of it. The
money can be placed in Brazilian treasury notes yielding an 12% return or in riskier high-yield bonds at an average rate
of return of 9%. Credit union regulations require diversification to the extent that at least 40% of the investment be
placed in Treasury notes. It is also decided that no more than 30% of the investment be placed in bonds.
The aim of the objective function for Rio Credit Union should be to Maximize the objective value.
The optimal ROI occurs when:
$ invested in Treasury notes =
(enter your response as a whole number).
Transcribed Image Text:The Rio Credit Union has $250,000 available to invest in a 12-month commitment and wants to invest all of it. The money can be placed in Brazilian treasury notes yielding an 12% return or in riskier high-yield bonds at an average rate of return of 9%. Credit union regulations require diversification to the extent that at least 40% of the investment be placed in Treasury notes. It is also decided that no more than 30% of the investment be placed in bonds. The aim of the objective function for Rio Credit Union should be to Maximize the objective value. The optimal ROI occurs when: $ invested in Treasury notes = (enter your response as a whole number).
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 3 steps with 1 images

Blurred answer
Knowledge Booster
Types of Money Market Instruments
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.
Similar questions
Recommended textbooks for you
Essentials Of Investments
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
FUNDAMENTALS OF CORPORATE FINANCE
FUNDAMENTALS OF CORPORATE FINANCE
Finance
ISBN:
9781260013962
Author:
BREALEY
Publisher:
RENT MCG
Financial Management: Theory & Practice
Financial Management: Theory & Practice
Finance
ISBN:
9781337909730
Author:
Brigham
Publisher:
Cengage
Foundations Of Finance
Foundations Of Finance
Finance
ISBN:
9780134897264
Author:
KEOWN, Arthur J., Martin, John D., PETTY, J. William
Publisher:
Pearson,
Fundamentals of Financial Management (MindTap Cou…
Fundamentals of Financial Management (MindTap Cou…
Finance
ISBN:
9781337395250
Author:
Eugene F. Brigham, Joel F. Houston
Publisher:
Cengage Learning
Corporate Finance (The Mcgraw-hill/Irwin Series i…
Corporate Finance (The Mcgraw-hill/Irwin Series i…
Finance
ISBN:
9780077861759
Author:
Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor
Publisher:
McGraw-Hill Education