Chapter 8.2, Problem 88AE

Financial Planning A young couple has $\text{\$25,000}$ to invest. As their financial consultant, you recommend that they invest some money in Treasury bills that yield $\text{7\%}$, some money in corporate bonds that yield $\text{9\%}$, and some money in junk bonds that yield $\text{11\%}$. Prepare a table showing the various ways that this couple can achieve the following goals:

(a) $\text{\$1500}$ per year in income

(b) $\text{\$2000}$ per year in income

(c) $\text{\$2500}$ per year in income

(d) What advice would you give this couple regarding the income that they require and the choices available?

[Hint: Higher yields generally carry more risk.]