Question
A retired couple have up to $30,000 to invest in fixed-income securities. Their broker recommends investing in two bonds: one a AAA bond yielding 8%;
A retired couple have up to $30,000 to invest in fixed-income securities. Their broker recommends investing in two bonds: one a AAA bond yielding 8%; the other a Upper B Superscript plus B+ bond paying 12%. After some consideration, the couple decide to invest at most $12,000 in the Upper B Superscript plus 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 Upper B Superscript plusB+ bond.What should the broker recommend if the couple (quite naturally) want to maximize the return on their investment?
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