Mr. Jones has $ 17,000 to invest in three types of stocks, low-risk, medium-risk

Question

Mr. Jones has $ 17,000 to invest in three types of stocks, low-risk, medium-risk, and high-risk. He invests according to three principles. The amount invested in low-risk stocks will be at most $ 5,000 more than the amount invested in medium risk stocks. At least $7000 will be invested in low and medium risk stocks. No more than 14,000 will be invested in medium and high risk stocks. the expected yields are 6% for low risk stocks, 7% for medium risk stocks and 8% for high risk stocks. how much money should Mr. Jones invest in each type of stock to maximize his total expected yield?

Explanation / Answer

As we want to maximize yield, we should invest as much as possible @ 8%,

so for "at least $7000 in L or M " we put exactly $7000 so as to put the max $10,000 in H
Now to satisfy no more than 14,000 in M & H, we put $4,000 in M
and we see that the balance $3,000 in L is pretty much permissible.
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$10,000 in H
$ 4,000 in M
$ 3,000 in L
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