Concept explainers
Return on Investment An investment broker is instructed by her client to invest up to , some in a junk bond yielding per annum and some in Treasury bills yielding per annum. The client wants to invest at least in T-bills and no more than in the junk bond.
(a) How much should the broker recommend that the client place in each investment to maximize income if the client insists that the amount invested in T-bills must equal or exceed the amount placed in the junk bond?
(b) How much should the broker recommend that the client place in each investment to maximize income if the client insists that the amount invested in T-bills must not exceed the amount placed in the junk bond?
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