he National Credit Union has $250,000available to invest in a 12-month commitmen
ID: 2444487 • Letter: H
Question
he National Credit Union has $250,000available to invest in a 12-month commitment. The money can beplaced in Treasury notes yielding an 12% 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 .
he National Credit Union has $250,000available to invest in a 12-month commitment. The money can beplaced in Treasury notes yielding an 12% 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
so you have to have minimum of 50% in treasury and a maximumof 40% in bonds : a) to maximize return you would want all of the funds in treasury in this case: 1(250000)=$250000: all of the funds in treasury in this case: 1(250000)=$250000: b)since treasury is paying the higher return you dont want anymonies in bonds.Zero :$250000(.12)=$30000 :
$250000(.12)=$30000
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