\ \
\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 | \
\
Value \ | \
![]() | \
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| \
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| \
| \
| \
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| \
\
| \
| \
| \
\
| \
\
| \
![]() | \
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\
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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.