\ \
\Consider is the amount placed in AAA bond and
is the amount placed in a CD. \ \
The total return is . \ \
Hence is the objective function to be maximized. \ \
The constraints are : \ \
\A positive amount must be invested in each then ,
. \ \
Total investment cannot exceed then . \ \
Investment in the CD must be atleast then
. \ \
Investment in the CD must exceed or equal the investment in the bond. \ \
\Graph : \ \
\Graph the constraints . \ \
\ \ \
Observe the graph the corner points are ,
,
,
and
. \ \
\ \
\The function is .
Point | \ \
Function | \
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Value \ | \
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The maximum profit is when
is invested in AAA bond and
is invested in a CD.
\ \
\The maximum profit is when
is invested in AAA bond and
is invested in a CD.