The National Credit Union has $250,000available to invest in a 12-month commitme
ID: 2444380 • Letter: T
Question
The National Credit Union has $250,000available to invest in a 12-month commitment. The money can beplaced in Treasury notes yielding an 5% return or in municipalbonds at an average rate of return of 9%. Credit union regulationsrequire diversification to the extent that at least 50% of theinvestment be placed in Treasury notes. Because of defaults in suchmunicipalities as Cleveland and New York, it is decided that nomore than 40% of the investment be placed in bonds.
How much should the National Credit Unioninvest in Treasury notes so as to maximize its return oninvestment?
Round your answer to the nearest wholenumber; for example, 123,456 .
How much should the National Credit Unioninvest in municipal bonds so as to maximize its return oninvestment?
Round your answer to the nearest wholenumber; for example, 123,456 .
What is the maximal return oninvestment?
$
Round your answer to the nearest wholenumber; for example, 12,345 .
The National Credit Union has $250,000available to invest in a 12-month commitment. The money can beplaced in Treasury notes yielding an 5% return or in municipalbonds at an average rate of return of 9%. Credit union regulationsrequire diversification to the extent that at least 50% of theinvestment be placed in Treasury notes. Because of defaults in suchmunicipalities as Cleveland and New York, it is decided that nomore than 40% of the investment be placed in bonds.
(a)How much should the National Credit Unioninvest in Treasury notes so as to maximize its return oninvestment?
Round your answer to the nearest wholenumber; for example, 123,456 .
(b)How much should the National Credit Unioninvest in municipal bonds so as to maximize its return oninvestment?
Round your answer to the nearest wholenumber; for example, 123,456 .
(c)What is the maximal return oninvestment?
$
Round your answer to the nearest wholenumber; for example, 12,345 .
Explanation / Answer
( a) Amount to be invested in treasurynotes 60% of 250000 150000 ( b ) Amount to be invested in Municipal bonds 40% of 250000 100000 ( c ) Maxumum Rate of return Treasury Notes 5% of 150000 7500 Municipal Bonds 9% of 100000 9000 Maxumum Rate of return 16500
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