Question 1037309: A retired couple has up to $30000 to invest in fixed-income securities. Their broker recommends investing in two bonds: one a AAA bond yielding 8%; the other a B+ bond paying 12%.After some consideration, the couple decides to invest at most $12000 in the B+-rated bond and at least $6000 in the AAA bond. They also want the amount invested in the AAA bond to exceed or equal the amount invested in the B+ bond. What should the broker recommend if the couple wants to maximize the return on their investment?
Answer by Theo(13342)   (Show Source):
You can put this solution on YOUR website! The B+ bonds pay the most, so he would want to maximize his investment in those.
since his investment has to be no more than 12000 in B+ bonds, he should invest 12000 in B+ bonds to get the most profit out of them.
since he has 30,000 to invest, the rest should go into AAA bonds.
that would be 18,000 in AAA bonds.
all the requirements in the problem are satisfied.
they are:
at most 12000 in B+ bonds - check.
at least 6000 in AAA bonds - check.
amount invest in AAA bonds greater than amount invested in B+ bonds - check.
broker should recommend 12000 in B+ bonds and 18000 in AAA bonds.
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