Return on Investment An investment broker is instructed by her client to invest $20,000

Chapter 4, Problem 16

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Return on Investment An investment broker is instructed by her client to invest $20,000 in two funds based on their average annual returns for 5 years ending December 31, 2009: a Global Bond fund yielding 9% and the Yachtman fund yielding 7%. The client wants to invest at least $8000 in the Yachtman fund and no more than $12,000 in the Global Bond fund. (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 the Yachtman fund must equal or exceed the amount placed in the Global Bond fund? (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 the Yachtman fund must not exceed the amount placed in the Global Bond fund?

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