Final answer:
To earn an $8680 annual income from the investments, the bank should invest $40,000 in bonds.
Step-by-step explanation:
Bond prices will fluctuate, but overall these investments are more stable, compared to other investments. “Bonds can bring stability, in part because their market prices have been more stable than stocks over long time periods,” says Alvarado.
To calculate how much should be invested in bonds, let's assume the amount invested in bonds is x. Since the sum of the bond and CD investment must equal the mortgage investment, the amount invested in CDs will also be x.
The amount invested in mortgages will be 2x. The annual income from the bonds can be calculated as 8% of x, which is 0.08x.
Similarly, the annual income from the CDs will be 6% of x, which is 0.06x. And the annual income from the mortgages will be 9% of 2x, which is 0.18x. So, the equation can be set up as: 0.08x + 0.06x + 0.18x = 8680.
Solving for x, we get x = 40000.
Therefore, the bank should invest $40,000 in bonds.