An investment firm recommends that a client invest in bonds rated AAA, A, and B. The average yield on AAA bonds is 5%, on A bonds 6%, and on B bonds
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Question

An investment firm recommends that a client invest in bonds rated​

AAA, A, and B. The average yield on AAA bonds is ​5%, on A bonds ​6%, and on B bonds ​9%. The client wants to invest twice as much in AAA bonds as in B bonds. How much should be invested in each type of bond under the following​ conditions?
A. The total investment is ​$​19,000, and the investor wants an annual return of ​$1,180 on the three investments.
B. The values in part A are changed to ​$33,000 and ​$2,060​, respectively.


Answer:
The client should invest ​$______________ in AAA​ bonds, ​$____________ in A​ bonds, and ​$___________ in B bonds.

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Investment in Bonds Part A and B.png


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Investment in Bonds Part A and B.png
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