Formulate but do not solve the problem.

Mr. and Mrs. Garcia have a total of$125,000to be invested in stocks, bonds, and a money market account. The stocks have a rate of return of13%/year, while the bonds and the money market account pay8%/year and3%/year, respectively. The Garcias have stipulated that the amount invested in the money market account should be equal to the sum of20%of the amount invested in stocks and25%of the amount invested in bonds. How should the Garcias allocate their resources if they require an annual income of$10,000from their investments? (Letx,y, andzdenote the amount, in dollars, in stocks, bonds, and money markets, respectively.)

=125,000

=10,000

=z

Formulate but do not solve the problem.

The management of a private investment club has a fund of$300,000earmarked for investment in stocks. To arrive at an acceptable overall level of risk, the stocks that management is considering have been classified into three categories: high-risk, medium-risk, and low-risk. Management estimates that high-risk stocks will have a rate of return of14%/year; medium-risk stocks,11%/year; and low-risk stocks,6%/year. The investment in low-risk stocks is to be twice the sum of the investments in stocks of the other two categories. If the investment goal is to have an average rate of return of 9%/year on the total investment, determine how much the club should invest in each type of stock. (Assume that all the money available for investment is invested. Letx,y, andzdenote the amount, in dollars, invested in high-, medium-, and low-risk stocks, respectively.)

=300,000

=z

= .09(300,000)