Financial Planning A retired couple have up to $ 50 , 000 to place in fixed-income securities. Their financial adviser suggests two securities to them: one is an AAA bond that yields 8 % per annum; the other is a certificate of deposit (CD) that yields 4 % . After careful consideration of the alternatives, the couple decide to place at most $ 20 , 000 in the AAA bond and at least $ 15 , 000 in the CD. They also instruct the financial adviser to place at least as much in the CD as in the AAA bond. How should the financial adviser proceed to maximize the return on their investment?
Financial Planning A retired couple have up to $ 50 , 000 to place in fixed-income securities. Their financial adviser suggests two securities to them: one is an AAA bond that yields 8 % per annum; the other is a certificate of deposit (CD) that yields 4 % . After careful consideration of the alternatives, the couple decide to place at most $ 20 , 000 in the AAA bond and at least $ 15 , 000 in the CD. They also instruct the financial adviser to place at least as much in the CD as in the AAA bond. How should the financial adviser proceed to maximize the return on their investment?
Solution Summary: The author illustrates the linear programming problem by assigning symbols for the two variables x and y.
Financial Planning A retired couple have up to
to place in fixed-income securities. Their financial adviser suggests two securities to them: one is an AAA bond that yields
per annum; the other is a certificate of deposit (CD) that yields
. After careful consideration of the alternatives, the couple decide to place at most
in the AAA bond and at least
in the CD. They also instruct the financial adviser to place at least as much in the CD as in the AAA bond. How should the financial adviser proceed to maximize the return on their investment?
Adirondack Savings Bank (ASB) has $1 million in new funds that must be allocated to home loans, personal loans, and automobile loans. The annual rates of return for the three types of loans are 7% for home loans, 12% for personal loans, and 9% for automobile loans. The bank’s planning committee has decided that at least 40% of the new funds must be allocated to home loans. In addition, the planning committee has specified that the amount allocated to personal loans cannot exceed 60% of the amount allocated to automobile loans.
Assume that ASB has the original $1 million in new funds available and that the planning committee has agreed to relax the requirement that at least 40% of the new funds must be allocated to home loans by 1%. How much would the annual return change? How much would the annual percentage return change? Discuss. *
Chapter 11 Solutions
Precalculus Enhanced with Graphing Utilities (7th Edition)
Thomas' Calculus: Early Transcendentals (14th Edition)
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