This example illustrates how to allocate money to different bonds to maximize the total return (Ragsdale 2011, p. 121). A trust office at the Blacksburg National Bank needs to determine how to invest $100,000 in following collection of bonds to maximize the annual return.
The officer wants to invest at least 50% of the money in short term issues and no more than 50% in high-risk issues. At least 30% of the funds should go in tax-free investments, and at least 40% of the total return should be tax free. Creating ...