Question: An investor plans to invest 150 000 in oil stock steel
An investor plans to invest $150,000 in oil stock, steel stock, and government bonds. The government bonds are guaranteed to yield 5%, but the yield for oil stock and steel stock can vary. To protect against major losses, the investor decides that the amount invested in oil stock should not exceed $50,000, and that the total amount invested in oil stock and steel stock should not exceed the amount invested in government bonds by $25,000. If the oil stock yields 12% and the steel stock yields 9%, how much should be allocated for each investment in order to maximize the return? What is the maximum return?
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