Question: Define the decision variables ,Formulate the objective function, Formulate the constraints Sears Investment has $250,000 available to invest in a 12-month commitment. The money can
Define the decision variables ,Formulate the objective function, Formulate the constraints
Sears Investment has $250,000 available to invest in a 12-month commitment. The money can be placed in Treasury notes yielding an 8% return or in municipal bonds at an average rate of return of 9%. Bank regulations require diversification to the extent that a t least 50% of the investment be placed in Treasury notes. Because of defaults in such municipalities as California and Texas, it is decided that no more than 40% of the investment be placed in bonds. How much should Sears Investment invest in each security so as to maximize its return on investment?
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